Pharmaceutical companies collaborate structurally to keep the market price of new medicines artificially high. Pharmaceutical companies try to make as much profit as possible this way by hindering competition via prohibited agreements. In an opinion piece in the ‘Nederlands Dagblad’, Andre den Exter, associate professor of Health Law at Erasmus School of Law, explains that these incidents have long been difficult to prove in court. Yet, this seems to be changing now.
Den Exter explains that in the pharmaceutical industry, it regularly occurs that pharmaceutical companies enter into ‘pay-for-delay’ agreements. When the patent on a new medicine is about to expire and other generic pharmaceutical companies want to sell the same medicine significantly cheaper after the expiry of the patent, the generic pharmaceutical companies and the pharmaceutical company with the patent right sometimes make a pay-for-delay agreement. This means that the generic pharmaceutical company will not sell its cheaper version until a certain date. By hindering market forces with these methods, market prices remain artificially high for a longer period of time.
The European Commission has introduced fines for entering into such agreements, but these have almost always been successfully challenged in the European Court. However, in 2020, a favourable judgement was made that could lead to change. Here, the judge has once again emphasized the undesirability of these clauses and, after years, finally accepted the European Commission's assessment framework for pay-for-delay agreements.
According to Den Exter, this ruling has set a precedent, whereby excessive payments between pharmaceutical companies will more often lead to fines in the future. From now on, pharmaceutical companies will have to come up with good arguments if they want to avoid getting fined for the possible use of pay-for-delay agreements.
- Associate professor
- More information
Read the full article (in Dutch) here.