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NL – Dutch Competition Authority Working Paper on Dominance abuse and patented pharmaceuticals / excessive pricing

22 Mar 2018

Chris Fonteijn, Ilan Akker and Wolf Sauter, ACM Working Paper, March 2018, Reconciling competition and IP law: the case of patented pharmaceuticals and dominance abuse

Chris Fonteijn is Chairman of the Dutch authority for consumers and markets (ACM). Ilan Akker and Wolf Sauter work in the Healthcare Taskforce of ACM. Wolf Sauter is also professor of economic law at Tilburg University.

The paper, published as an ACM working paper -but on personal title as stated in a footnote- provides an overview of the relevant literature and case law and some of the main economic arguments in relation to the application of the abuse of dominance prohibition, especially excessive pricing, to IP protected pharmaceuticals.

It appears to be quite strict on when pricing is excessive:

applying the prohibition on excessive prices above the quality of life adjusted year (qaly) threshold will improve investment decisions (as in: cause them to focus on socially relevant products) rather than harm them, […]. In the Netherlands as in many other countries, a threshold value has been set for the maximum willingness to pay for new drugs and healthcare technology more generally. The threshold varies in the Netherlands depending on the severity of the disease with a maximum value of €80.000 per qaly. Given the existence of a threshold per qaly, one could argue that drugs over this threshold (in this example €80.000) are welfare decreasing rather than welfare increasing.

In its conclusions it hints at new excessive pricing investigations and cases in the future:

Hence we believe that given the excessive pricing cases regarding pharmaceuticals not covered by IP protection that we have already seen (and that are now in the pipeline), and in view of the arguments canvassed above excessive pricing cases addressing patented products are bound to follow.

The complete working paper can be read here.