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Competition Law/Policy and the Consequences for Access and Innovation for
Medicines/Healthcare
Globalising Asia: Health Law, Governance, and Policy – Issues, Approaches, and Gaps!
Bangkok 16-18 April, 2012
Scheme
• Gaps in policy direction• Understanding competition law/policy (CL/P)• CL/P interface with health sector and related
issues• Attempts at global level on competition
law/policy• Conclusions / recommendations
Gaps in Policy Direction (1)
[Right to health takes precedence over commercial interest]
IGWG-GSPA-PHI Negotiations
Gaps in Policy Direction (2)
“Development” remaining a undefined term
Competition Law
• Main aims:– To prevent practices having adverse effect on
competition– To promote and sustain competition in markets– To protect the interests of consumers
• Mainly deals with:– Anti-competitive agreements (collusions/cartels)– Abuse of dominance– Regulation of combinations (M&As)– Competition advocacy (recommendatory)
Competition Policy (1)
• CP is generally to deal with policy-induced anti-competitive outcomes
• CP in general means the governmental measures that affect behaviour of firms and the structure of industry, and is necessary to prevent anti-competitive practices and promote competitive environment in the market (including by removing entry barriers)
• CP can ensure efficient use of resources, better quality products at lower price and check hurdles to fair competition
Competition Policy (2)
• Nine principles of CP– To foster competitive neutrality between public &
private sector enterprises– Ensure access to essential facilities– Facilitate easy movement of goods, services and
capital– Separate policy-making, regulation and operation
functions – Ensure free and fair market process
Competition Policy (3)
• Nine principles of CP...– Balance competition and IPRs– Ensure transparent, predictable and participatory
regulatory environment– Notify and publicly justify deviation from
competition principles– Respect international obligations
CL/P-Health Sector
• Pharmaceuticals• Medical Devices• Health Services• Health Insurance• Public Health Procurement
CL/P-Pharma (1)(collusion)
• Collusions b/w pharma companies– E.g. Vitamin cartel leading global pharma (US, 90s); 20 pharma labs (including
Roche, Aventis, Bayer, GlaxoWellcome and AstraZeneca) fined for colluding to create barriers to entry of generics (Brazil, 2005)
• Collusion b/w pharma companies and doctors– E.g. Irrational prescription-drug promotion (asymmetry of information)
• Collusion b/w pharma cos. and pharmacists (also b/w players in the supply line)
• Collusion b/w pharmacists – CCI investigation on AIOCD
• Rectification through invoking CL and/or competition advocacy (removal of asymmetry of information)
CL/P-Pharma (2)Exorbitant trade margins (CUTS Study, 2006)
COMPANY BRAND MRPPURCHASE PRICE OF
RETAILERSRanbaxy Stannist 26 1.80Cadila Ceticad 26 1.60Cipla Ceticip 27.5 2.00Lupin Lupisulide 24 1.94Wockhardt Setride 25.2 1.70Lyka Labs Lycet 25 1.44Ranbaxy Pyrestat-100 25 1.50Welcure Drugs Omejel Caps 33 4.50Wockhardt Merizole-20 39 6.48
CL/P-Pharma (3)IP-Competition (Abuse of dominance)
• Generic competition• Use of TRIPS flexibilities to the fullest
– Stricter patentability criteria– Research exemption– Bolar provision– Contd. production of generic – mail box appln– Compulsory license (access to essential facilities)– Parallel import– Pre and post grant opposition– No data exclusivity– Enforcement measures (counterfeit definition issue)
• Patent thickets and markush claims• Patent pool (a platform to collude)
CL/P-Pharma (3)(M&As)
Year Indian Co taken over
Foreign Company
which took over
Country of origin
Take over amount USD
millions
Aug 2006 Matrix Lab Mylan USA 736
April 2008 Dabur Pharma Fresenius Kabi Singapore 219
June 2008 Ranbaxy Labs Daiichi Sankyo
Japan 4600
July 2008 Shanta Biotech
Sanofi Aventis France 783
Dec 2009 Orchid Chemicals
Hospira USA 400
May 2010 Piramal Healthcare
Abbott USA 3720
CL/P-Pharma (4)(M&As)
• Public health concerns– Many large domestic companies capable of
making use of this provision have alliances with the MNCs involving commercial interests, Thus they would not like to risk these alliances by taking up CL.
– It may leave the country without option for use of CL to meet the problems of public health
• FIPB v. CCI
Medical Device
• Dependence on import (India: 75%)• Lack/uncertainty of regulation • Non-regulatory entry barriers
– Lack of R&D and testing infrastructure– Lack of skilled work force– High capital intensive and lack of access to capital
• Lack of incentive from government– Incentivises imports; ready to give higher prices for devices
approved by US or EU – Higher duty on raw material than on finished products
• Unecessary Procurement conditions
Health Services
• Collusion b/w physicians and pharma cos.• Collusion b/w private hospitals and drug cos.• Tied selling • Malpractices by doctors to obtain commissions from
path labs/diagnostic/ radiological labs in lieu of referring for tests
• Lack of health personnel acting as entry barriers for hospitals – requires changes in Medical Council Act and Nursing Council Act to facilitate creation of adequate number of health personnel
Public health procurement
• Bid rigging• Purchasing directly from manufacturers• Unnecessary criteria related with turn over (around
Rs.250 mn) and/or market standing of firms (3 years)
• Government likely to become purchaser of tertiary healthcare (and part secondary health care)– Guidelines for such procurements need to be developed
Health Insurance
• Asymmetry of information leading to moral hazards and hence disincentive for cos.– Regulation of provider needed
• Minimum capital requirement in India Rs.1bn– Entry barrier for small community-based insurance
schemes• Lack of consumers interest in not being getting
cashless policies, list of exclusions etc.• Rashtriya Swasthya Bima Yojna – pro-competition
and is likely to change scenario
Global initiatives on competition
• WTO Working Group on Interaction b/w trade and competition
• UNCTAD is doing lots of work
• WIPO Development Agenda
Conclusion/Recommendations
• CL/P can be an useful tool in liberalising economies from public health point of view– Public health faculty and law faculty may like to explore these areas
together • Health safety regulations need not be taken as barriers to
competition; but it need to be based on sound science (issues related with bio-similars) and should function in a transparent manner
• Develop a tool kit on competition in health sector for authorities of respective countries
• Australia has good experience in the region and can have a guiding role
