Skip to main content
SpringerLink
Log in

Excessive Pharmaceutical Prices as an Anticompetitive Practice in TRIPS and European Competition Law

  • Chapter
  • First Online:
New Developments in Competition Law and Economics

Part of the book series: Economic Analysis of Law in European Legal Scholarship ((EALELS,volume 7))

Abstract

The issue of securing access to patented pharmaceutical products has been in the forefront of global legal debate for many years. This debate intensified further following the enactment of the TRIPS agreement and the global enforcement of Intellectual Property Rights such as patents through the World Trade Organization. To combat the problem, compulsory licensing has been forwarded as one solution, though hitherto mainly discussed from the human rights and right to health perspectives. Less attention has been focused on excessive prices of medicines as an anticompetitive practice in and out of themselves, and how competition law and legal-economics theories and models can inform this deadlocked issue.

Such a treatment of excessive prices under competition law would constitute a sound legal basis for anti-competetive enforcement such as compuslory licensing but also make other tools available to competition authorities such as fines. This could be done making use of the flexibilities entailed in this regard in the TRIPS agreement context, mainly through article 31(k) and article 40.

Shifting focus to the European Competition Law, the notion of “unfair” or excessive prices has been enshrined in article 102 TFEU regarding exploitative pricing abuses by a dominant firm, although the application and enforcement of this has been rather limited in practice. Recent case law and an evoloution of thought regarding competition law and legal-economics theories point however to a possible policy shift in this regard.

The paper hence analyses the unlocked potential entailed in competition law in treating excessive pharmaceutical prices as an anticompetitive practice where applicable and discusses the legal-economic theories underpinning this discourse.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 139.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 179.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Lee et al. (2012), p. 220.

  2. 2.

    WHO, Fact sheet 360, 2014, http://www.who.int/mediacentre/factsheets/fs360/en/, accessed 2018-06-06.

  3. 3.

    Millennium Development Goals 8E, http://www.who.int/mediacentre/factsheets/fs290/en/, accessed 2018-06-06.

  4. 4.

    Maskus (2001–2002).

  5. 5.

    Lidgard and Atik (2005).

  6. 6.

    Holger Hestermeyer (2007).

  7. 7.

    Helfer and Austin (2011).

  8. 8.

    Lee et al. (2012).

  9. 9.

    Moon (2013).

  10. 10.

    Treaty on the Functioning of the European Union, OJ C 326, 26.10.2012, pp. 47–390.

  11. 11.

    Gal (2004), p. 347 ff.

  12. 12.

    Kobayashi and Muris (2012), p. 508 ff.

  13. 13.

    United States v. Alcoa, 148 F.2d 416 (2d Cir. 1945), Berkey Photo, Inc v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979), Verizon Communications, Inc v Law Offices of Curtis v Trinko, LLP 157 L Ed 2d 823, 836 (2004).

  14. 14.

    See R. Hewitt Pate, Assistant Attorney Gen., U.S. Dep’t of Justice, Competition and Intellectual Property in the U.S.: Licensing Freedom and the Limits of Antitrust, Address Before the 2005 EU Competition Workshop 9 (June 3, 2005), available at http://www.usdoj.gov/atr/public/speeches/209359.pdf (“Bringing a complaint to the Antitrust Division about ‘excessive’ royalties, without more, is a losing strategy.” Cited in U.S. DOJ & FTC, Antitrust Enforcement and Intellectual Property rights: Promoting innovation and competition, 2007, footnote on p. 82.).

  15. 15.

    US Antitrust Guidelines for Licensing of Intellectual Property 2017, issued by DOJ & FTC 12th January 2017, see also FTC Chariman Statement Maureen K Ohlhausen January 13th 2017.

  16. 16.

    CEO Martin Shkreli: 4000% drug price hike is ‘altruistic,’ not greedy, https://www.washingtonpost.com/news/to-your-health/wp/2015/09/22/turing-ceo-martin-shkreli-explains-that-4000-percent-drug-price-hike-is-altruistic-not-greedy/?utm_term=.228850df73c4, accessed 2018-06-06.

  17. 17.

    Pfizer, Flynn Get Record Fine on 2600% Drug Price Increase, https://www.bloomberg.com/news/articles/2016-12-07/pfizer-flynn-pharma-fined-record-106-million-by-u-k-regulator, accessed 2018-06-06.

  18. 18.

    Commission opens formal investigation into Aspen Pharma’s pricing practices for cancer medicines, European Commission—Press release, 15th may 2007. http://europa.eu/rapid/press-release_IP-17-1323_en.html, accessed 2018-06-06.

  19. 19.

    DG Competition Overview on Pharmaceutical and Health Services, http://ec.europa.eu/competition/sectors/pharmaceuticals/overview_en.html, accessed 2018-06-06.

  20. 20.

    Nguyen (2011), p. 43.

  21. 21.

    Harrison (2007), p. 282.

  22. 22.

    Bowman (1973), cited in Carrier (2011), p. 187.

  23. 23.

    Annex 1C of the Marrakesh Agreement establishing the World Trade Organization, signed in Marrakesh, Morocco on 15 April 1994, 1869 UNTS 299; 33 ILM 1197 (1994).

  24. 24.

    Agreement Establishing the World Trade Organization–Marrakesh Agreement, 1867 UNTS 154; 33 ILM 1144 (1994).

  25. 25.

    WHO, Access to Medicines, http://www.who.int/trade/glossary/story002/en/, accessed 2018-06-06.

  26. 26.

    Hestermeyer (2007), p. 2 (with reference to the critique raised from Oxfam and Medicine Sans Frontiéres and the negotiating groups from developing countries in the notes 3–10).

  27. 27.

    Doha Ministerial Declaration on Public Health, WT/MIN (01)/DEC/1; 41 ILM 746 (2002).

  28. 28.

    WHO General Council Decision 2 December 2015 (WT/L/971).

  29. 29.

    Gupta (2010), p. 357.

  30. 30.

    Paris Convention for the Protection of Industrial Property, 1883, UST 1583, 828 UNTS 305.

  31. 31.

    Lidgard and Atik (2005), p. 5.

  32. 32.

    Annex 1C of the Marrakesh Agreement establishing the World Trade Organization, signed in Marrakesh, Morocco on 15 April 1994, 1869 UNTS 299; 33 ILM 1197 (1994), Article 21.

  33. 33.

    Gupta (2010), p. 359.

  34. 34.

    IP/N/9/RWA/1 19 July 2007.

  35. 35.

    IP/N/10/CAN/1 8 October 2007.

  36. 36.

    Wakely (2011), p. 302 ff.

  37. 37.

    Gellhorn et al. (2004), p. 12.

  38. 38.

    Maggiolino (2011), footnote 11 on p. 4.

  39. 39.

    Gellhorn et al. (2004), p. 69.

  40. 40.

    Elhauge and Geradin (2011), p. 1.

  41. 41.

    Baker (2007), p. 575 ff.

  42. 42.

    Bowman (1973), cited in Carrier (2011), p. 189.

  43. 43.

    Hart (2001), p. 929.

  44. 44.

    Cited in Alberto Cavaliere, Lecture on Competition Policy, http://economia.unipv.it/cavaliere/Competition%20Policy_lesson1.ppt, accessed 2018-06-06.

  45. 45.

    Mathis (2009), p. 179.

  46. 46.

    Office of the Price Administration, http://www.archives.gov/research/guide-fed-records/groups/188.html#188.1, accessed 2018-06-06.

  47. 47.

    Rockoff, “Price Controls” The Concise Encyclopedia of Economics, Library of Economics and Liberty; http://www.econlib.org/library/Enc/PriceControls.html, accessed 2018-06-06.

  48. 48.

    Diocletian’s edict on maximum prices, http://www.forumancientcoins.com/NumisWiki/view.asp?key=Edict+of+Diocletian+Edict+on+Prices, accessed 2018-06-06.

  49. 49.

    von Mieses (1923); http://mises.org/etexts/mises/critique/section5.asp, accessed 2018-06-06.

  50. 50.

    Hou (2011), p. 48.

  51. 51.

    Motta and de Streel (2006), p. 15 ff.

  52. 52.

    Motta and de Streel (2006), p. 49.

  53. 53.

    Gellhorn et al. (2004), p. 57.

  54. 54.

    Mathis (2009), p. 116.

  55. 55.

    Piraino (2007), p. 367.

  56. 56.

    Elhauge and Geradin (2011), p. 414.

  57. 57.

    Correa et al. (2014), p. 35 ff.

  58. 58.

    http://www.ip-watch.org/2014/05/19/undp-report-promotes-competition-law-to-boost-access-to-medicines/, accessed 2018-06-06.

  59. 59.

    Correa et al. (2014), p. 51 ff.

  60. 60.

    http://www.lawyerscollective.org/wp-content/uploads/2014/12/patent-controller-decision.pdf, accessed 2018-06-06.

  61. 61.

    http://www.lawyerscollective.org/wp-content/uploads/2014/12/IPAB-decision.pdf, accessed 2018-06-06.

  62. 62.

    http://www.lawyerscollective.org/wp-content/uploads/2014/12/bombay-high-court-judgment.pdf, accessed 2018-06-06.

  63. 63.

    Correa et al. (2014), p. 146.

  64. 64.

    Henry and Searles (2012), p. 9.3 ff.

  65. 65.

    Ong (2015), p. 246.

  66. 66.

    Ong (2015), p. 258.

  67. 67.

    Treaty Establishing the European Economic Community, 11957E/TXT (1957), cited in Nguyen (2011), p. 95.

  68. 68.

    Sherman Act, 15 U.S.C.A. §§ 1-7, 26 STAT. 209 (1890) As Amended, Section 1 & 2.

  69. 69.

    Seitz (2014), pp. 369–371.

  70. 70.

    Nguyen (2011), p. 95.

  71. 71.

    Van Den Bergh and Camacesca (2006), p. 5.

  72. 72.

    http://ec.europa.eu/archives/emu_history/documents/treaties/rometreaty2.pdf, accessed 2018.06.06.

  73. 73.

    http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:12012E/TXT&from=EN, accessed 2018-06-06.

  74. 74.

    Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertaking; http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:52009XC0224(01), accessed 2018-06-06.

  75. 75.

    Hou (2011), p. 47.

  76. 76.

    Commission Regulation (EU) No 316/2014.

  77. 77.

    Commission Guidelines 2014/C 89/03).

  78. 78.

    Antitrust: Commission adopts revised competition regime for technology transfer agreements European Commission - IP/14/299 21/03/2014.

  79. 79.

    http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:12012E/TXT&from=EN, article 345.

  80. 80.

    Consten & Grundig (ECJ Joined Cases, 56/64, and 58/64, Consten & Grundig vs. The Commission, 1964).

  81. 81.

    Nguyen (2011), p. 97.

  82. 82.

    Working Party No. 2 on Competition and Regulation, Excessive Prices, European Union, 17th October 2011. DAF/COMP7WP2/WD/(2011)54, para 13.

  83. 83.

    Working Party No. 2 on Competition and Regulation, Excessive Prices, European Union, 17th October 2011. DAF/COMP7WP2/WD/(2011)54, para 15–17.

  84. 84.

    Working Party No. 2 on Competition and Regulation, Excessive Prices, European Union, 17th October 2011. DAF/COMP7WP2/WD/(2011)54, para 21–23.

  85. 85.

    United Brands 27/76 [1978] ECR 207, para 252.

  86. 86.

    Working Party No. 2 on Competition and Regulation, Excessive Prices, European Union, 17th October 2011. DAF/COMP7WP2/WD/(2011)54, para 45.

  87. 87.

    Working Party No. 2 on Competition and Regulation, Excessive Prices, European Union, 17th October 2011. DAF/COMP7WP2/WD/(2011)54, para 61.

  88. 88.

    Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union Text with EEA relevance, para 39–46.

  89. 89.

    Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union Text with EEA relevance, definitions 20.

  90. 90.

    General Motors Continental NV v. Commission Case 26/75 (1975).

  91. 91.

    General Motors Continental NV v. Commission Case 26/75 (1975) para 12.

  92. 92.

    Case COMP/36.568 Scandlines Sverige AB v Port of Helsingborg, Commission Decision of 23 July 2004.

  93. 93.

    Case COMP/36.568 Scandlines Sverige AB v Port of Helsingborg, Commission Decision of 23 July 2004, para 232.

  94. 94.

    Judgment of the Court (Second Chamber) of 14 September 2017, C-177/16 - Biedrība “Autortiesību un komunicēšanās konsultāciju aģentūra - Latvijas Autoru apvienība” Konkurences padome.

  95. 95.

    Opinion of Advocate General Wahl delivered on 6 April 2017 (1) in Case C-177/16, ECLI:EU:C:2017:286.

  96. 96.

    Opinion of Advocate General Wahl delivered on 6 April 2017 (1) in Case C-177/16, ECLI:EU:C:2017:286, para 18–19.

  97. 97.

    Opinion of Advocate General Wahl delivered on 6 April 2017 (1) in Case C-177/16, ECLI:EU:C:2017:286, para 91–95.

  98. 98.

    Opinion of Advocate General Wahl delivered on 6 April 2017 (1) in Case C-177/16, ECLI:EU:C:2017:286, para 106.

  99. 99.

    Opinion of Advocate General Wahl delivered on 6 April 2017 (1) in Case C-177/16, ECLI:EU:C:2017:286, para 48.

  100. 100.

    Commission opens formal investigation into Aspen Pharma’s pricing practices for cancer medicines, Press release Brussels, 15 May 2017, IP/17/1323.

  101. 101.

    Commission opens formal investigation into Aspen Pharma’s pricing practices for cancer medicines, Press release Brussels, 15 May 2017, IP/17/1323.

  102. 102.

    European Commission, Response to Parliamentary Question P-008636/ 2014.

  103. 103.

    Margarethe Vesterager, Speech delivered on 21 November 2016, Protecting consumers from exploitation, Chillin’ Competition Conference, Brussels. https://ec.europa.eu/commission/commissioners/2014-2019/vestager/announcements/protecting-consumers-exploitation_en, accessed 2018-06-06.

  104. 104.

    CMA fines Pfizer and Flynn £90 million for drug price hike to NHS, Press Release CMA, https://www.gov.uk/government/news/cma-fines-pfizer-and-flynn-90-million-for-drug-price-hike-to-nhs, accessed 2018-06-06.

  105. 105.

    CMA alleges anti-competitive agreements for hydrocortisone tablets, Press release 3 March 2017, https://www.gov.uk/government/news/cma-alleges-anti-competitive-agreements-for-hydrocortisone-tablets, accessed 2018-06-06.

  106. 106.

    Hildebrand (2017), pp. 41–43.

  107. 107.

    Hildebrand (2017), p. 48.

  108. 108.

    Anderson and Kovacic (2017), p. 23.

  109. 109.

    United Brands 27/76 [1978] ECR 207.

References

  • Anderson, Robert D and Kovacic, William E (2017) ‘The application of competition policy vis-à-vis intel- lectual property rights: the evolution of thought underlying policy change’, WTO Staff Working Paper, No ERSD-2017-13, 19

    Google Scholar 

  • Baker JB (2007) Beyond Schumpeter vs. Arrow: how antitrust fosters innovation. Antitrust Law J 74(3):575–602

    Google Scholar 

  • Bowman WS (1973) The compatibility of Antitrust and Patent Law Goals. In: Carrier MA (ed) Intellectual Property and Competition, 2011, p 189

    Google Scholar 

  • Carrier MA (2011) Intellectual property and competition. Edward Elgar

    Google Scholar 

  • Correa C, Abbott F et al (2014) Using competition law to promote access to health technologies: a guidebook for low- and middle-income countries. UNDP

    Google Scholar 

  • Elhauge E, Geradin D (2011) Global competition law and economics. Hart

    Google Scholar 

  • Gal M (2004) Monopoly pricing as an antitrust offense in the U.S. and the EC: two systems of belief about monopoly? Antitrust Bull 49(1–2):343–384

    Article  Google Scholar 

  • Gellhorn E et al (2004) Antitrust law and economics. West Academic Publishing

    Google Scholar 

  • Gupta R (2010) Compulsory licensing under TRIPS, how far it addresses Public Health Concerns in Developing Countries. J Intellect Prop Rights 15:357–363

    Google Scholar 

  • Harrison JL (2007) Law and economics. Norton, W. W. & Company, Inc.

    Google Scholar 

  • Hart DM (2001) Antitrust and technological innovation in the US: ideas, institutions, decisions, and impacts, 1890–2000. Res Policy 30(6):923–936

    Article  Google Scholar 

  • Helfer LR, Austin GW (2011) Human rights and intellectual property – mapping the global interface. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • Henry D, Searles A (2012) Pharmaceutical pricing policy. In: Managing access to medicines and health technologies. Management Sciences for Health, Inc., Alington

    Google Scholar 

  • Hestermeyer H (2007) Human rights and the WTO: the case of patents and access to medicines. Oxford university Press, Oxford

    Google Scholar 

  • Holger H (2007) Human rights and the WTO: the case of patents and access to medicines. Oxford university Press, Oxford

    Google Scholar 

  • Hildebrand D (2017) The equality and social fairness objectives in EU competition law: the European School of thought. Concorrences 1(2017):Art. N° 82642

    Google Scholar 

  • Hou L (2011) Excessive prices within EU competition law. Eur Compet J 7(1):47–70

    Article  Google Scholar 

  • Kobayashi BH, Muris TJ (2012) Chicago, Post-Chicago, and beyond: time to let go of the 20th century. Antitrust Law J 78:505–526

    Google Scholar 

  • Lee, Lee J-Y, Hunt P (2012) “Human rights responsibilities of pharmaceutical companies” in relation to access to medicines. J Law Med Ethics 40(2):220–233

    Article  Google Scholar 

  • Lidgard, Hans-Henrik and Atik, Jeff (2005) “Facilitating compulsory licensing under TRIPS in response to the AIDS, crisis in developing countries”, Loyola Law School, Legal Studies Paper No. 2005-18

    Google Scholar 

  • Maggiolino M (2011) Intellectual property and antitrust, a comparative economic analysis of US and EU law. Edward Elgar

    Google Scholar 

  • Maskus KE (2001) Ensuring access to essential medicines: some economic considerations. Wisconsin Int Law J 20(3):563–579

    Google Scholar 

  • Mathis K (2009) Efficiency instead of Justice? Searching for the philosophical foundations of economic analyis of law. Springer, Dordrecht

    Book  Google Scholar 

  • Moon S (2013) Respecting the right to access to medicines: implications of the UN guiding principles on business and human rights for the pharmaceutical industry. Health Hum Rights 15(1):32–43

    Google Scholar 

  • Motta M, de Streel A (2006) Exploitative and exclusionary excessive prices in EU law. In: Ehlermann C-D, Atanasiu I (eds) What is an abuse of a dominant position? Hart

    Google Scholar 

  • Nguyen TT (2011) Competition law in technology transfer under the TRIPS agreement – implications for the developing countries. Edward Elgar

    Google Scholar 

  • Ong B (2015) Compulsory licensing of pharmaceutical patents to remedy anti-competitive practices under article 31(k) of the TRIPS agreement: can competition law facilitate access to essential medicines. In: Hilty RM et al (eds) Compulsory licensing – practical experiences and ways forward. Springer, Dordrecht

    Google Scholar 

  • Piraino TA Jr (2007) Reconciling the Harvard and Chicago Schools: a new antitrust approach for the 21st century. Indiana Law J 82(2):346–409

    Google Scholar 

  • Seitz C (2014) Economic principles in the aftermath of the more economic approach. In: Mathis K (ed) Law and economics in Europe. Springer, Dordrecht

    Google Scholar 

  • Van Den Bergh RJ, Camacesca PD (2006) European competition law and economics: a comparative perspective. Sweet & Maxwell

    Google Scholar 

  • von Mieses L (1923) 1Handwörterbuch der Staatswissenschaften, 4th edn. Verlag G. Fischer, Jena

    Google Scholar 

  • Wakely J (2011) Compulsory licensing under TRIPS: an effective tool to increase access to medicines in developing and least developed countries. Eur Intellect Prop Rev 33(5):299–309

    Google Scholar 

Case Law

  • Berkey Photo, Inc v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979)

    Google Scholar 

  • Consten & Grundig (ECJ Joined Cases, 56/64, and 58/64, Consten & Grundig vs The Commission, (1964)

    Google Scholar 

  • General Motors Continental NV v. Commission Case 26/75 (1975)

    Google Scholar 

  • Judgment of the Court (Second Chamber) of 14 September 2017, C-177/16 - Biedrība “Autortiesību un komunicēšanās konsultāciju aģentūra - Latvijas Autoru apvienība” Konkurences padome

    Google Scholar 

  • Opinion of Advocate General Wahl delivered on 6 April 2017 (1) in Case C-177/16, ECLI:EU:C:2017:286

    Google Scholar 

  • Scandlines Sverige AB v. Port of Helsingborg, Case COMP/36.568 Commission Decision of 23 July 2004

    Google Scholar 

  • United Brands v. Commission 27/76 [1978] ECR 207

    Google Scholar 

  • United States v. Alcoa, 148 F.2d 416 (2d Cir. 1945)

    Google Scholar 

  • Verizon Communications, Inc v Law Offices of Curtis v Trinko, LLP 157 L Ed 2d 823, 836 (2004)

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Center for Advanced Studies in Biomedical Innovation Law, Faculty of Law, University of Copenhagen, Copenhagen, Denmark

    Behrang Kianzad

Authors
  1. Behrang Kianzad
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Behrang Kianzad .

Editor information

Editors and Affiliations

  1. Faculty of Law, University of Lucerne, Lucerne, Switzerland

    Klaus Mathis

  2. The School of Law, University of Notre Dame, Notre Dame, IN, USA

    Avishalom Tor

Rights and permissions

Reprints and permissions

Copyright information

© 2019 Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Kianzad, B. (2019). Excessive Pharmaceutical Prices as an Anticompetitive Practice in TRIPS and European Competition Law. In: Mathis, K., Tor, A. (eds) New Developments in Competition Law and Economics. Economic Analysis of Law in European Legal Scholarship, vol 7. Springer, Cham. https://doi.org/10.1007/978-3-030-11611-8_10

Download citation

  • DOI: https://doi.org/10.1007/978-3-030-11611-8_10

  • Published:

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-030-11610-1

  • Online ISBN: 978-3-030-11611-8

  • eBook Packages: Law and CriminologyLaw and Criminology (R0)

Publish with us

Policies and ethics

Search

Navigation