To avoid shortages in the supply of key medicines, the European Commission on 8th April 2020 announced a temporary relaxation of the relevant European competition rules and now allows for limited business cooperation between pharmaceutical companies to meet demand. The Temporary Framework for the assessment of antitrust issues relating business cooperations is intended in particular to ensure the supply of hospitals with medicines for coronavirus patients.
In this context, the Commission will also issue so called “comfort letters” concerning a specific cooperation project aimed at avoiding situations of shortages of critical hospital medicines. The Temporary Framework explains when and how firms can obtain guidance or written comfort in accordance with competition rules.
The Temporary Framework provides that manufacturers may coordinate more closely than normally permitted under European antitrust rules. This may apply to production, warehousing and possibly coordination of distribution, so that not all companies concentrate on one or a few medicines while other medicines are not produced in sufficient quantities.
The Communication on the Temporary Framework sets out the main criteria that the Commission will use when considering these possible cooperation projects. In particular, the Commission will not take action if the cooperation project is
- objectively necessary to actually increase output in the most efficient way to address or avoid a shortage of supply of essential products or services, such as those that are used to treat COVID-19 patients;
- temporary in nature (i.e. to be applied only as long there is a risk of shortage or in any event during the COVID-19 outbreak); and
- not exceeding what is strictly necessary to achieve the objective of addressing or avoiding the shortage of supply.
The Commission’s press release of April 8th 2020 is available here.
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