Antitrust: Aspen proposes 73% price reduction for six off-patent cancer medicines to remove Commission’s excessive pricing concerns

medicine_

(Credit: Unsplash)

This article is brought to you in association with the European Commission.


The European Commission invites comments from all interested parties on commitments submitted by Aspen to address the Commission’s concerns over excessive pricing as regards six off-patent cancer medicines. Aspen proposes to reduce its prices in Europe for these medicines by 73% on average. In addition, Aspen proposes to ensure the continued supply of the medicines for a significant period. Comments can be sent within two months from the publication of the commitments in the Official Journal. The Commission will then take a final view as to whether the commitments sufficiently address competition concerns.

For more details, including on the next steps in the investigation, please see the press release.

  1. Which medicines and countries do the proposed commitments cover?

The commitments proposed by Aspen cover all medicines and all Member States for which the Commission identified competition concerns.

Medicines

The commitments cover six off-patent prescription medicines that are used in the treatment of certain types of cancer and mainly haematological cancers, such as multiple myeloma, chronic lymphocytic leukaemia or acute lymphocytic leukaemia. Some of these medicines are used only by small patient groups. The medicines are mostly sold under the brand names Alkeran 2 mg Tablets, Alkeran IV / 50mg (Intravenous), Purinethol, Leukeran, Lanvis and Myleran and contain the active ingredients melphalan, mercapto­purine, chlorambucil, tioguanine and busulfan. Aspen acquired these six cancer medicines from another company in 2009. Their patent protection had expired 50 years ago.

Countries

Aspen’s proposed commitments cover the entire European Economic Area (EEA), except Italy, where a decision by the Italian competition authority was taken in 2016 (upheld in the last instance in March 2020) regarding the Italian market and the same medicines (except Myleran). The six medicines are each sold in a different number of countries, so the commitments concern for each of the medicines a different list of countries.

  1. What do the proposed commitments aim at achieving?

The proposed commitments aim at bringing to an end Aspen’s suspected excessive pricing conduct with respect to its six off-patent cancer medicines, which the Commission suspects to constitute an abuse of a dominant position. The commitments would achieve this by introducing quick, tangible and lasting changes in the markets for each of the six products and in each country where the medicines are sold. They would (i) immediately apply price reductions to Aspen’s net prices, (ii) impose a ten-year price-ceiling, and (iii) guarantee supply:

(i) Reduction in prices

The net prices to wholesalers for each of the six cancer medicines would significantly drop in all markets where Aspen’s current prices raise concerns under the EU competition rules. On average, Aspen’s net prices would drop by approximately 73% across all the medicines and Member States concerned.

For most of the medicines and on average, the reduced net prices would be below the levels of 2012, when Aspen started its strategy of high price increases. After the price reductions, the net wholesale prices for the various medicines would still differ between Member States. This is because the reduced prices have been determined on the basis of Aspen’s costs which differ considerably across products and Member States. The reduced net wholesale prices for each product and for each Member State are set out in Table 1 of the proposed commitments.

(ii) Ten-year price ceiling

The prices proposed in the commitments are maximum net prices (price ceilings). This means that prices are not fixed and Aspen is free to charge and agree with Member States on lower prices.

The price ceilings would apply for a period of ten years from the day following the Commission’s decision declaring the commitments binding. During the second half of that ten-year period, Aspen would be entitled to one possible review of the net price ceilings by the Commission, with the support of an independent monitoring trustee, but only if Aspen’s costs linked to the medicines increase significantly (by at least 20%). Any resulting change in the net price ceilings would be proportionate to any cost increase, and, as part of the review process, the Commission would, ensure that the revised ceiling does not raise any concerns over excessive prices.

(iii) Continued supply of medicines

Aspen would commit, first, to the continued supply of the six cancer medicines for a guaranteed minimum period of five years (2020-2024).

Then, for a second five-year period (2025-2029), Aspen would commit to either continue supplying the medicines, or, if it decides to stop the sale of a given product in a given country, to help continued supply by (i) giving a one-year’s notice to the national authorities concerned; (ii) at the same time making the medicines’ marketing authorisations available for sale to any third party that is interested in taking over supply; and (iii) maintaining the registration of the marketing authorisations until their transfer to another supplier.

  1. How would it be ensured that the price reductions are implemented in compliance with rules on pricing and reimbursement of each Member State?

Price reductions for medicines may be subject to national pricing and reimbursement procedures, e.g. where so-called formal ‘list prices’ need to change. Where this is the case, Aspen would be required to submit immediately applications for list price reductions, in compliance with applicable national procedures. Aspen would also have a duty to proactively assist the relevant regulatory authorities to achieve the price reductions.

  1. From when and for how long would the reduced prices apply?

The reduced net wholesale prices would apply if and as soon as the Commission accepts them and would remain capped at that level for the following ten years. In addition, the reduced prices would be applied retroactively as of 1 October 2019, date on which Aspen concretely proposed commitments to the Commission. To apply the price reductions already from that date, Aspen would grant a rebate for any amount charged that exceeds the reduced net prices. Aspen would pay that rebate to the public and private entities in the Member States that ultimately paid or reimbursed Aspen’s medicine prices. In the two Member States where limited co-payment existed, also patients would receive a small rebate. The rebates would apply for the period until the medicines’ list prices change or, where list prices do not form part of the national system, until Aspen’s reduced net wholesale prices become otherwise effective. The rebates would therefore also ensure that no health system or patient pays excessive prices during this transitional period.

  1. Why is it important to ensure the supply of the six cancer medicines?

The commitments proposed by Aspen concern the price of six off-patent medicines that are critical for the treatment of patients suffering from certain types of life-threatening cancer, such as leukaemia and multiple myeloma. For patients, it is not only important that the medicines are not sold at excessive prices, but also that the medicines continue to be available in their country. For this reason, the commitments not only envisage a ten-year price ceiling, but also contribute to ensuring supply for ten years.

  1. How would the implementation of the proposed commitments be monitored?

After taking into account all the comments received in response to its market test notice and the proposed commitments, the Commission will take a final view as to whether the proposed commitments address its competition concerns, eventually adopting a decision making the commitments legally binding on Aspen.

Aspen’s compliance with the commitments will be monitored for their entire duration by an independent monitoring trustee, approved by the Commission. The trustee has reporting obligations to the Commission, for example, on Aspen’s progress and timing in implementing the maximum reduced net prices in various Member States. In the event that Aspen does not comply with the commitments, the trustee may also propose measures to Aspen within a specified timeframe to ensure compliance.

  1. How was Aspen able to impose very high prices for the medicines?

Based on the Commission’s preliminary assessment, for most of the six medicines there were no alternative suppliers and, in the few Member States where other pharmaceutical companies entered the market, they did so only recently. Furthermore, the medicines are essential medicines; patients depend on them. National pricing and reimbursement authorities were under pressure to ensure the supply of these medicines to patients and effectively had little option but to agree to Aspen’s price increase requests. Aspen even went as far as threatening to withdraw the medicines from the national list of reimbursable medicines and in some cases was ready to withdraw from normal supply in the Member State.

  1. To what extent has the Commission worked together with Member States on this and other suspected excessive pricing cases in the sector?

Through the European Competition Network, the Commission works regularly and closely together with national competition authorities, including in the pharmaceutical sector. Regarding Aspen’s pricing practices, the Commission has cooperated very closely with the Italian competition authority, both in the proceedings against Aspen in Italy (see under Question 1) and those at EU level. National competition authorities may indeed take action against suspected violations of EU competition law on national markets where they have early on sufficient evidence at their disposal. Where it then turns out that the same conduct exists (and persists) also in other Member States or across the EU, the Commission may decide to launch an investigation as well.

In the Aspen case, the Commission was also in close contact with national health authorities to, amongst others, seek information on Aspen’s conduct in the various Member States, and on how the proposed commitments, if accepted, could be implemented at national level. More generally, national regulators and national health authorities play an important role in designing and implementing effective regulatory frameworks regarding medicine prices and reimbursement. In very specific circumstances, EU competition rules may also apply, namely when a firm in a dominant position imposes such high prices that they amount to excessive prices within the meaning of the EU competition rules. Continuous efforts by all private and public stakeholders are needed to meet the societal challenge of ensuring access to affordable and innovative medicines.

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