B4 mdorazil competition - ver02

Venice Summer School 2010 – EU Integration and HealthSystems, 28 July 2010 Unit E.1, Antitrust – Pharma and Health Services Martin Dorazil,European Commission, DG Competition State aid / Public procurement and Health Martin Dorazil,European Commission, DG Competition • "Competition policy is basically about making sure that companies compete with each other on an equal footing – on the basis of their products and prices –with no unfair advantages." – Low prices for all– Better quality– More choice– Innovation– Better competitors in a global market Martin Dorazil,European Commission, DG Competition Antitrust (Articles 101 & 102 of the TFEU)
– Agreements between companies that restrict competition (cartels or other – Action by a major player to squeeze competitors out of the market ("abuse of • Merger Control (EC Merger Regulation)
– Mergers or other formal agreements between companies; • Liberalization (Article 106 of the TFEU)
– Opening up markets to competition (in areas such as transport, energy, postal • State Aid Control (Articles 107 & 108 of the TFEU)
– Financial support granted by Member States to companies. Martin Dorazil,European Commission, DG Competition Agreements or decisions of associations of undertakings or concerted Adversely affecting trade between Member States • Paragraph 3 - The Exception (“Rule of Reason”) Martin Dorazil,European Commission, DG Competition • Agreements/behaviour fulfilling the criteria for exemption are • The Commission, each NCA and each Court may assess independently whether an agreement is prohibited or not • The Commission may grant exemptions to categories of agreements (“block exemptions” e.g. for vertical agreements, motor vehicle distribution, R&D cooperation) • Per se prohibition of certain hard core restrictions (e.g. fixing prices, production or sales quotas, sharing markets …) Martin Dorazil,European Commission, DG Competition Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market insofar as it may affect trade between Member States.” Dominance: the ability to behave independently from customers & competitors – Imposing unfair purchase or selling prices or other unfair trading conditions – Limiting production, markets or technical development – Applying dissimilar conditions on equivalent transactions – Certain forms of bundling & tying Martin Dorazil,European Commission, DG Competition • Art. 101 and 102 enforced in parallel by the European Commission, National Competition Authorities (NCAs) and national courts Decisions which are binding on the companies concerned Judicial review by the General Court (formerly Court of First Instance) with a further appeal to the European Court of Justice No criminal sanctions! (US: jail sentences for antitrust violations possible) impose fines of up to 10% of overall turnover impose structural remedies (only if proportionate and behavioral remedies would not work) Martin Dorazil,European Commission, DG Competition • Regulation 139/2004 (EC Merger Regulation) • All mergers above certain turnover thresholds must be notified to the Commission before they are implemented • The Commission examines whether the proposed merger ”would significantly impede effective competition (…), in particular as a result of the creation or strengthening of a dominant position” (Article 2 ECMR) Martin Dorazil,European Commission, DG Competition Legal basis:
Basic rule:
There are exceptions
– Member States must notify the aid and wait for the – In order to grant aid, the Member State must have the Martin Dorazil,European Commission, DG Competition • Promoting small and medium-sized enterprises • Research and development (R & D), • Training, employment and culture.
Martin Dorazil,European Commission, DG Competition • Mergers – examples from Health sector • State aid / Public procurement and Health Martin Dorazil,European Commission, DG Competition "Every entity engaged in economic activity, regardless of the legal status of the entity and the way in which it is financed" (C-41/90 Höfner) – organisations charged with the management of compulsory social security schemes, based on the principle of solidarity (C-159/91 and C-160/91, Poucetand Pistre) – sickness funds when they determine fixed maximum amounts corresponding to the upper limit of the price of medicinal products whose cost is borne by sickness funds (C-264/01 AOK Bundesverband) – organisations managing national health service carrying out purchasing activities when the purchased goods were used exclusivelz to provide services free ofcharge on the basis of universal coverage (C-205/53 FENIN) – a non-profit making pension fund, optional affiliation, principle of capitalisation (C-244/94 Fédération Française des sociétés d'assurance ) – pension funds operating in competition with insurance companies (C-67/96, Albany, Case C-115/97, Brentjens and Case C-67/96 Drijvende Bokken) Martin Dorazil,European Commission, DG Competition • Area with probably most competition scrutiny over the past • A specialised trader buys a medicine at a low price in one MS and exports it to another MS where the product is sold at a higher price.
• Pharma companies argue that they lose significant parts of their revenues => various mechanisms aimed at eliminating orlimiting parallel trade: – IPRs, Repackaging and Tracking (Cases: Hoffmann-La Roche; Bristol- Myers Squibb; Boehringer Ingelheim) – Dual Pricing (GSK case) – Supply quota systems (Adalat case, Lelos case) Martin Dorazil,European Commission, DG Competition • GSK case (C-501/06 P, C-513/06 P, C-515/06 P and C- – upper price limits for reimbursed medicines in Spain, but no such upper limits for exported products – Commission: refused to grant exemption under Art. 81(3) – ECJ: the Commission had not sufficiently investigated/rebutted the arguments put forward by GSK Martin Dorazil,European Commission, DG Competition • Limit the volumes for wholesalers and thus indirectly limit the volumes • Art. 101 – Adalat case (C-2/01 P and C-3/01 P) – Bayer ceased to fulfil orders if wholesalers believed to export– Commission: anticompetitive agreement existed between Bayer and the wholesalers, as they had continued their commercial relations in spite of the supply restrictions – ECJ: “no meeting of minds“ = no agreement • Art. 102 – Lelos case (C-468/06 to 478/06) – GSK interrupted and then limited supplies to Greek wholesalers to limit – ECJ: limiting parallel trade is in principle anti-competitive under Art. 82 EC– But not an unlimited supply obligation on dominant pharmaceutical companies => orders “out of the ordinary“ Martin Dorazil,European Commission, DG Competition January 2008 – July 2009EU Pharmaceutical sector: Total annual sales in 2007: € 214 billion2% GDP = Each patient spends 430 €/annum on prescriptionmedicines Generic delayDecline in innovationImportance also of regulatory frameworkFinal Report underlines the need for effective patent system to maintain incentives for innovation Martin Dorazil,European Commission, DG Competition • Generic delay: more than 7 months on average – Generic price is on average 25% lower than price of originator product prior to loss of exclusivity.
– Two years after entry, prices of generic medicines are 40 % – Overall price levels drop about 25% two years after Martin Dorazil,European Commission, DG Competition Impact of generic entry
Savings from generic entry: (sample: 17 MS and limited number of products) Actual savings of € 15bn on the sample of 50 billion € over 8 yearsPotential savings of € 3bn more if generic entry is immediate (= 20%) Potential additional savings
if no delays (EUR 3 bn)

Savings from
Generic Entry
(EUR 15bn)
Aggregate expenditure: EUR 50 bn
Aggregate savings: EUR 15 bn
Potential additional sa

Source: http://www.observatorysummerschool.org/materiale2010/148/B4_MDorazil.pdf


Ergebnisübersicht: Gechingen,PLS vom 19.-20.05.2012 19.05.2012 - 20.05.2012 1 Springprüfung Kl. M* mit Stechen Springprüfung Kl. M* mit StechenEhrenpreis gegeben von Fa. Böckmann1. Simon Metz (Ammerbuch/PSV Gäufelden e.V/GER) auf Levell *0.00 / 37.942. Melanie Deck (Ehningen/RFV Ehningen) auf Queeny 49 *0.00 / 42.283. Viktoria Gohl (Wildberg/RG Waldhof Wildberg/GER) auf Rotdorn 8 *


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