Alleged anti-competitive conduct from suppliers of Remicade drug
First published by Admin on July 21, 2017 in the following categories: Investigations and tagged with cma
The Competition and Markets Authority (CMA) has been investigating the pharmaceutical industry since 1st December 2015 for suspected breaches of competition laws.
In one investigation, it’s alleged that pharmaceutical company Merck Sharp & Dohme Limited (MSD) engaged and operated in an anti-competitive discount scheme for its medicine brand Remicade which is the biological medicine called infliximab.
Use of Remicade
Remicade reduces the effect of substances in the body that causes inflammation. The medicine can reduce signs and symptoms and induce and maintain remission in adult patients with moderately to severely active Crohn’s disease who haven’t responded well to other therapies. It can also be used to treat rheumatoid arthritis, psoriatic arthritis, ulcerative colitis and ankylosing spondylitis.
CMA provisional findings
On 23rd May 2017, the CMA came to a provisional finding that MSD breached competition laws as follows: namely Chapter II of the Competition Act (CA) and Article 102 of the Treaty on the Functioning of the European Union (TFEU).
Chapter II of the CA prohibits any conduct on the part of one or more undertakings which amounts to abuse of a dominant position in a market if it may affect trade within the U.K. Article 102 of the TFEU reinforces the Chapter II prohibition and it also gives examples of what abuse may consist of.
Such abuse includes directly or indirectly imposing unfair purchase or selling prices of other unfair trading conditions. This seems like what MSD did in offering the discount scheme.
The CMA has emphasised that these findings are provisional and no conclusions must be made on whether there’s a breach of the above competition laws.
Wider effects
It’s alleged that MSD broke competition laws by abusing a dominant position which is likely to restrict competition from ‘biosimilar’ versions of the medicine infliximab that may emerge on the market. This could have a knock-on effect on the NHS, who may be blocked from using cheaper alternatives.
It’s alleged MSD has already attempted to prevent NHS doctors from using rival suppliers. This could have a degrading impact on patients who rely on this medicine. About 100,000 NHS patients are treated with it, costing the NHS approximately £150 million per year.
What are the repercussions if they’re found to be guilty?
Before the CMA determines if there has definitely been a breach, the competition watchdog will have to carefully consider representations made by MSD. Their proposal is to find MSD and parent company Merck & Co Inc. jointly and severally liable for the alleged infringement.
If they’re found to have infringed competition laws, the CMA could impose formal charges on the pharmaceutical company which could lead to fines of tens of millions of pounds. The CMA has the power to issue fines of up to 10% of the company’s global turnover, which could mean a maximum of more than £3 billion. In practice, the CMA will probably impose a penalty of millions instead of billions.
Denied allegations
MSD has currently denied all allegations. A spokesperson said:
“MSD is confident that the proceedings will show that MSD has complied with competition law at all times. The discounts in question meant that infliximab was competitively priced and offered savings to the U.K. NHS without hindering competition.”
CMA’s commitment
This investigation has shown the CMA’s commitment on clamping down on medicine pricing and anti-competitive behaviour.