[Ip-health] TRIPS Council (November 2018): Statement of the European Union on competition policy

Thiru Balasubramaniam thiru at keionline.org
Fri Nov 9 06:03:58 PST 2018


https://www.keionline.org/29187
TRIPS Council (November 2018): Statement of the European Union on
competition policyPosted on November 9, 2018 by Thiru

On 9 November 2018, the European Union (EU) delivered the following
statement on IP and competition policy at the WTO TRIPS Council under
agenda item 13 on Intellectual Property and the Public Interest: Promoting
Public Health Through Competition Law and Policy (an item co-sponsored by
South Africa, Brazil, and India).

Responding to South Africa’s description of competition policy as a TRIPS
flexibility, the EU declared:

While the submission from South Africa seems to consider the use of
competition policy a TRIPS flexibility, the EU would be cautious and would
emphasise the following: while the TRIPS agreement is obviously compatible
with the application of competition policy measures, it clearly does not
allow for “absolute policy space”. As provided for in Article 8 (1) and
(2), as well as in Article 40 (2), these measures have to be consistent
with the provisions of the TRIPS agreement and cannot be used as tools in
avoiding the obligations under the Agreement.

In relation to excessive pricing, the EU stated:


   Concerning excessive pricing as a competition law infringement in the
   pharmaceutical sector, there have been only very few decisions in the EU,
   specifically, by Denmark, Italy, and the United Kingdom.


   At the EU level, the European Commission is currently conducting one
   investigation into unfair pricing of medicines. That case concerns pricing
   practices by Aspen, a global pharmaceutical company headquartered in South
   Africa, with several subsidiaries in the EEA. The investigation concerns
   Aspen’s pricing practices for niche medicines used for treating cancer.
   Aspen acquired these medicines many years after their patent protection had
   expired and hence the investigations concerns generic pharmaceutical
   products. The European Commission’s investigation of Aspen’s pricing in the
   EU markets with the exception of Italy is ongoing and therefore we cannot
   comment it any further.


   In a related case concerning the Italian market, the Italian competition
   authority found that Aspen’s pricing amounted to an abuse of dominance, and
   ordered the company to set new fair prices for the medicines concerned. The
   Italian authority applied a two step test (referred to as the United Brands
   test). First, it examined whether the difference between cost and price
   indicated excessive profit margins and, second, whether that the price was
   unfair in relation to a number of factors.

The full text of the EU intervention, as delivered, can be found below.
------------------------------

As already stated at the last TRIPS Council, in general, we do not consider
the TRIPS Council the appropriate forum to discuss competition policy.
There are other international for a, such as the International Competition
Network, where such international exchanges and cooperation are taking
place.

While the submission from South Africa seems to consider the use of
competition policy a TRIPS flexibility, the EU would be cautious and would
emphasise the following: while the TRIPS agreement is obviously compatible
with the application of competition policy measures, it clearly does not
allow for “absolute policy space”. As provided for in Article 8 (1) and
(2), as well as in Article 40 (2), these measures have to be consistent
with the provisions of the TRIPS agreement and cannot be used as tools in
avoiding the obligations under the Agreement.

Generally, competition policy plays an important role in controlling and
sanctioning anti-competitive market behaviour in any sector, including the
pharmaceutical sector.

Concerning excessive pricing as a competition law infringement in the
pharmaceutical sector, there have been only very few decisions in the EU,
specifically, by Denmark, Italy, and the United Kingdom.

At the EU level, the European Commission is currently conducting one
investigation into unfair pricing of medicines. That case concerns pricing
practices by Aspen, a global pharmaceutical company headquartered in South
Africa, with several subsidiaries in the EEA. The investigation concerns
Aspen’s pricing practices for niche medicines used for treating cancer.
Aspen acquired these medicines many years after their patent protection had
expired and hence the investigations concerns generic pharmaceutical
products. The European Commission’s investigation of Aspen’s pricing in the
EU markets with the exception of Italy is ongoing and therefore we cannot
comment it any further.

In a related case concerning the Italian market, the Italian competition
authority found that Aspen’s pricing amounted to an abuse of dominance, and
ordered the company to set new fair prices for the medicines concerned. The
Italian authority applied a two step test (referred to as the United Brands
test). First, it examined whether the difference between cost and price
indicated excessive profit margins and, second, whether that the price was
unfair in relation to a number of factors.

Apart from the investigation into unfair, or excessive pricing, the
European Commission has sanctioned also other measures. In 2005, the
Commission found that AstraZeneca misled patent offices to enjoy a patent
extension (in the form of a Supplementary Protection Certificate) to which
it was legally not entitled. This finding was confirmed in a final judgment
by the Court of Justice in 2012. In 2013 and 2014, the Commission issued
three pay-for-delay decisions (Lundbeck, Johnson&Johnson, Servier) against
agreements which sought to extend exclusivity of originator products by
paying out would-be generic entrants, including for discontinuing
litigation to remove patent barriers.

The EU Commission has not pursued any case involving unreasonably high
royalties for a technology transfer. Nor has it ordered an originator
company as the IP holder to grant a licence for its proprietary technology
to remedy a competition law infringement.

At the EU level, the application of competition policy has so far not been
needed as a remedy against excessive pricing as a result of IPR protection
(i.e. a licence to generics to bring down the price) or to otherwise remedy
patent barriers to generic entry.

The above examples show that competition law enforcement in the EU is done
on a case-by-case basis. Where the Commission intervenes in cases involving
IPRs, it gives particular attention to preserving the balance between
static competition (short term price effects) and dynamic competition (long
term innovation effects).

On the international level, the EU cooperates with other national
authorities, including WTO Members, on competition policy and enforcement
issues of mutual interest. Our main objective has been to promote
convergence of competition policy instruments and practices across
jurisdictions and to facilitate cooperation with competition authorities in
other jurisdictions in enforcement activities.

Cooperation with other competition authorities takes place at two levels.
First, the Commission discusses competition-related matters in various
international fora, such as the International Competition Network (ICN),
where excessive pricing was discussed during its annual conference in
Portugal in 2017. ICN brings together competition authorities from more
than 100 jurisdictions which exchange experiences and best practices in
several meetings every year. Second, the Commission is also regularly
engaged in bilateral cooperation, including related to the pharmaceutical
sector. The nature of the cooperation activity varies between countries and
can cover cooperation on specific investigations, dialogue on competition
policy issues as well as capacity building support.

Therefore, we remain to be convinced about the need to discuss competition
policy at the TRIPS Council.


-- 
Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org


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