Olswang EU competition law bulletin - Life science focus

United Kingdom

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

In this bulletin, we provide an update on the latest competition law activity in the European life science sector. The UK’s Competition and Markets Authority ("CMA") appears to have taken over from the European Commission as most active enforcer in the sector (the Commission now having moved its attention to e-commerce). However, developments are also ongoing in France, Germany, Romania and Russia.

Focus on the UK 

Paroxetine pay-for-delay decision due Autumn 2015

Last time we reported that the decision in the CMA’s investigation into pay-for-delay agreements relating to the sale of the antidepressant drug, paroxetine, was due to be published imminently. However, in August the CMA issued a statement in which it said that it would need more time to consider the parties’ responses to the statements of objections issued in 2013 and 2014.  Generic pharma companies Alpharma, Generics UK and Norton Healthcare are all alleged to have reached agreements with GlaxoSmithKline (“GSK”) to delay the launch of cheaper generic versions of GSK’s branded product Seroxat. The decision is now expected this autumn.

Pfizer and Flynn Pharma subject to excessive pricing investigation  

In August 2015, the CMA sent a statement of objections to Pfizer and Flynn Pharma, accusing the companies of having abused their market power by charging excessive and unfair prices in the UK for a drug used to treat epilepsy, Epanutin. The investigation covers the prices the Pfizer charged to Flynn Pharma as well as the prices that Flynn Pharma in turn charged to its customers since 2012 when Pfizer sold the distribution rights for the drug to Flynn Pharma.

Following the sale of the distribution rights, Pfizer continued to manufacture the drug and sold it to Flynn Pharma at a price significantly higher than it had charged previously. Flynn Pharma then added a significant mark up in selling the drug on to consumers, meaning that the price increased from £0.66 per 28 capsules to £15.74. As a result the NHS annual spend on this drug increased from £2.3m in 2012 to just over £50m in 2013 and £40m in 2014.

Excessive pricing cases are generally difficult to establish and there is limited precedent. This case should help in providing guidance on when a price may be considered excessive under antitrust law.      

CMA drops investigation into drug rebates but issues guidance

In June the CMA cited administrative priorities as the reason for choosing to terminate an investigation into loyalty inducing rebates and discounts in the pharmaceutical sector. The CMA chose not to identify the company which had been the subject of the investigation and noted that this decision did not mean that similar arrangements would not be investigated in the future.

The CMA provided some useful guidance on the circumstances in which the provision of rebates or discounts by a dominant company may raise competition concerns (see here). The essential issue is that rebate or discount schemes may have the potential to exclude or limit the ability of competing firms to operate on a level playing field with the dominant player. Where competition is restricted in this way, the incentives for firms to innovate may be reduced and customers may suffer higher prices in the longer term.

Court challenge by online retailer over unfair pricing

In an interesting example of private enforcement of competition law in the UK courts, an online retailer, Vet UK, is seeking damages from Probiotic International on grounds that Probiotic’s pricing policy is discriminatory against online retailers.

Probiotic uses wholesale distributers to supply treatments that contain micro-organisms under the brand name Protexin. Vet UK is a retailer of such products and alleges that Probiotic’s pricing policy results in higher prices being charged to online retailers than to bricks and mortar outlets. Online retail restrictions are currently at the top of the agenda for European competition enforcement with several on-going investigations and a sector inquiry focussing on ecommerce.


On 24 September 2015, Cedegim lost an appeal against a fine of €5.7m imposed by the French competition authority as a result of Cedegim’s refusal to supply its medical database to certain pharmaceutical laboratories. The competition authority’s decision was issued in July 2014 and found Cedegim dominant on the French market for medical databases.

Earlier this year, the Paris Court of Appeal also rejected an appeal against a fine imposed on Reckitt Benckiser in relation to its anti-competitive agreement with Schering Plough which sought to impede competition from a generic version of Subutex, a drug used to treat heroin addiction.


The makers of weight loss product, Almased, have been found to be infringing German competition law through supply agreements which require pharmacies to abide by a minimum resale price in exchange for a 30% discount. Any such agreement will amount to anticompetitive resale price maintenance as resellers must be free to set their own retail prices.


The Romanian competition authority is investigating whether GSK’s new national distribution model for Avodart, Seretide and Tyverb restricts parallel exports. It is inviting comments on commitments proposed by GSK by 5 October.


In our March 2015 update we reported that a Russian court dismissed an appeal by Teva in respect of a fine imposed by the Russian Competition Authority ("FAS”) for Teva’s abuse of dominance in its refusal to supply its multiple sclerosis drug, Copaxone. In August, Teva confirmed in a statement that it had paid the fine of 300,000 rubles.

In another refusal to supply case, Baxter, the manufacturer of the renal deficiency treatment, Extranil, accepted an FAS fine in May this year. Baxter’s fine totalled 1.3m rubles.

Against the back drop of these fining decisions, the FAS has issued guidance to dominant pharmaceutical companies on how they can avoid infringing Russian competition law. The guidelines, which are available in English here, use both the Teva and Baxter cases as a means of illustrating how the FAS will approach investigations in this sector.


The non-confidential version of the European Commission’s decision in its perindopril pay-for-delay case was finally published in July (see here). The decision has been appealed by Servier, Krka, Mylan, Lupin, Teva and Unichem.