Pharmaceuticals – OECD DAF/COMP – November 2018 OECD discussion

This presentation by Pedro CARO DE SOUSA from the OECD Competition Division was made during the discussion “Excessive Pricing in Pharmaceuticals” held at the 130th meeting of the OECD Competition Committee on 28 November 2018. More papers and presentations on the topic can be found out at oe.cd/exph.

1. Excessive Pricing
in
Pharmaceuticals
DAF / Competition Division, OECD
Paris, 27 November 2018

2. Prior Work on:
•Excessive Pricing (2011)
•Pharmaceuticals
–Competition and Regulation Issues in the Pharmaceutical
Industry’ (2000)
–Generic Pharmaceuticals (2009)
–Competition and Generic Pharmaceuticals (2014)
–Competition Issues in the Distribution of Pharmaceuticals
(2014, Global Forum)
Background
2

3. Excessive Pricing
3
Do NotIntervene! Intervene!
Highpricesaresignalsforentry Permanentandhighbarrierstoentry
Difficultieswithidentifying‘right’
prices
‘Excessive’pricescanbeidentified
Competitionagenciesarenotprice
regulators
•Highpricesalreadyproscribedin
somecircumstances
•Competitionagenciescanact
instead,orintandemwith
regulators
Enforcementerrors(falsepositives)Enforcementerrors(falsenegatives)
•Goalofcompetitionislowerprices!
ChillingInnovation •Care,andcarefulremedydesign
•Enforcementprioritisationcriteria

4. Excessive Pricing
4
Enforcement Screens
•Significant Market Power
•High and DurableBarriers to Entry
•Interventionshould not adversely affect innovation
and research
•Alternative regulatory intervention either impossible,
very unlikely, inappropriate or absent

5. •Doesthepharmaceuticalsectormeetthesecriteria?
•Howshouldexcessivepricingtestsbeappliedinthe
heavilyregulatedpharmasector?
•Shouldbothgenericsandbrandedmedicinesbe
subjecttoexcessivepricing?
•Whynow?
•In2011,onlythreeexcessivepricingpharmacaseswere
mentioned,alldecade(s)old
Questions
5

6. Why now?
6
•Increasingnumberofpricespikes
–USGAOtracked1,411genericsbetween2011-2015
315instancesofsuddenpriceincreasesof100%ormore
48instancesofsuddenpriceincreasesof500%ormore
Priceincreases>100%doubledbetween2010(43
instances)and2015(103instances)
•Manypriceincreasesfollowmarketexit
•DeclineinnumberofGenericsSuppliers
–40%ofgenerics’marketsaresuppliedbyasinglemanufacturer
–Sevensuppliersprovidemajorityofinjectableproducts(US)