Dutch competition authority ACM starts sector inquiry into anti-rheumatism drugs

The Dutch Authority for Consumer and Market (ACM) recently  announced in its agenda that it would be looking into the issue of high prices for medicines charged by pharmaceutical companies.

The ACM has now taken a first step to live up to that promise by announcing a sector inquiry into so-called TNF inhibitors, drugs used to combat rheumatism. These TNF inhibitors are, according to the ACM, one of the most expensive prescription drugs for both hospitals and patients, both in the Netherlands and worldwide.

Not only are the prices for these drugs relatively high, but they are also used by a large number of patients. The ACM is looking further into the reasons for the relatively high price level of the TNF inhibitors, despite the fact that there are various alternatives available on the market.

A sector inquiry does not mean automatically that the ACM has reasons to believe that anticompetitive conduct has taken place on the market that is the subject of the sector inquiry. As such, the inquiry is different from a formal investigation by the ACM when it does have foundations for such suspicions. In such a case, the investigation usually starts off with dawn raids to obtain evidence for a competition law violation.

Where sector inquiries are concerned, the ACM will request stakeholders in the relevant sector to provide the ACM with information on particular aspects of the market. In this particular case, the ACM announced that it will look into the alternatives the prescribers of TNF-inhibitors can choose from (based on the active ingredient) and also the competitive landscape once a drug's patent has expired.

The ACM announced that its inquiry will be directed inter alia towards hospitals, health insurers, purchasing groups, patient groups and pharmaceutical companies. The requests for information from the ACM will concern information regarding prices and volumes, compensations, discounts, substitutability, and prescription behaviour in order for the ACM to better understand the functioning of this market.

Even though the direct purpose of the sector inquiry is not to establish violations of the Dutch Competition Act, follow-up steps could nevertheless lead to findings of anticompetitive behaviour. The ACM also explicitly refers to this possibility in its press release.

A number of ACM officials recently wrote a Working Paper in which they explained how a competition authority could (and should) deal with excessive pricing in the pharmaceutical sector, even if the relevant product is protected by patents. Even though the paper is not a formal position of the ACM as such, it would be naïve not to assume that the ACM has similar views on at least parts of the issue.

Although in recent years the ACM has imposed significantly fewer fines and lower fine amounts that might change in the near future as the ACM appointed a new chairman recently, Mr Martijn Snoep, former partner of the biggest law firm in the Netherlands.

It is hard to tell if Mr. Snoep will advocate a more sanction-heavy approach or will carry on in the same manner as his predecessor, Mr Chris Fonteijn. If anything, this sector inquiry will prove to be an indicator in what way the ACM plans to operate regarding the pharmaceutical sector in the years to come.