The Competition Council launched for public consultation the report on sector inquiry on pharma market One of the conclusions of the sector inquiry on pharma sector carried out by the Competition Council is that the generic medicines, although are with 35% less expensive than the innovative ones, have not a significant market share even many years after they entered on the market. In the same time, the competition authority found that there are markets where, once the generic medicines appears, there increased the market share of other innovative medicines for which no generic equivalent exists yet. The conclusions of the sector inquiry are similar to those of the previous sector inquiry, concluded by the Competition Council in 2011 which showed that there is a high concentration of certain markets, mainly due to marketing of innovative medicines. The sector inquiry showed also that 57% of patients require a specific brand of medicines following the doctor recommendation, though in Romania, the active substance is specified on the prescription and only in exceptional circumstances the brand. The Competition Council identified as a possible cause of this behaviour the producer intensive promotion of innovative medicines. Thus, a company producing innovative medicines spends an average of 9% of its turnover for promotion activity while a company producing generic medicines allocates about 5%. 1
In 2014, the promotion and advertising expenditure made by medicines producers in Romania amounted approx. lei 362 million. As a result, the doctors recommend innovative medicines as they are influenced by the medicines producers by marketing, promotion and advertising activities: scientific congresses, meetings, promotional and advertising materials, sponsorships. The most involved medical specialties are family/general medicine physicians followed by cardiologists and internists. The Competition Council considers that doctors could be encouraged to prescribe generic medicines by receiving financial incentives in case they do not exceed a monthly budget and the savings to the budget could be used by doctors for other purposes such as internships. In case of referencing medicines, the patient pays the difference between the reference price (usually of the cheapest generic) and the price of sold medicines, depending on the degree of compensation. The analysis showed that, in most cases, the cheapest generic is missing from the market or is sold in small quantities. In this context, the Competition Council proposes the elimination from the compensation lists of the medicines that are marketed in insufficient quantities and are maintained just for reference price. Also, the Competition Council supports the limitation of marketing expenses for certain categories of activities, respectively a better definition of expenditure that can be made for each type of marketing or promotion activity. The competition authority also recommends an analysis on the possibility of setting a maximum amount that can be allocated to a prescribing physician in a year. At the same time, the analysis performed at pharmacies showed that patients are directed to certain pharmacies to purchase medicines. As a result, a very small number of pharmacies administrate a high amounts reimbursed at county level. For example, in Iasi, in September 2014, out of 386 pharmacies who delivered medicines included in national health programs, a single pharmacy reimbursed 69% out of total medicines released within the National Oncology Program. Within the National Transplant Program, a pharmacy reimbursed 43% of all medicines. 2
Thus, the Competition Council recommends the elimination of advantages that can be offered to doctors by representatives of pharmacies or distributors so that they, in turn, to distribute promotional coupons available only in some pharmacies. In this way, there will be a real competition between pharmacies, based on competitive prices and quality service. To motive distributors and pharmacies to sell inexpensive medicines a solution for it to become profitable is to apply a fixed amount per distribution service, respectively pharmacy. Also, in order distributors/ pharmacies not to sell or promote a particular medicine in the detriment of another, a possible solution would be to limit the discounts. Another practice is that the most distributors relate the delivery of medicines that are requested and well sold as mandatory to the acquisition of other medicines the pharmacy would not order if it is not forced. This tying sale affects cash-flow of pharmacies and their ability to compete effectively on the market. The Competition Council recommends the introduction in the Health Law of a provision that forbids tying sale (packages) in case of medicines distribution. Within the sector inquiry, the situation on missing medicines was also analysed and a certain percentage of exports for each of them were found. Therefore, the Competition Council recommends a more effective monitoring of the obligation of public service by ANMDM (the National Agency for Medicines and Medical Devices) at each level of the medicines supply chain, including the pharmacies. Thus, the producers must ensure, firstly, sufficient quantities to meet the national need, the distributors to supply mainly on domestic market, and to export only surpluses quantities. Also, to improve the availability of medicines, the competition authority recommended to distributors to supply all pharmacies, not just those integrated. At present, there are still vertically integrated pharmacies with a common management with the distributor, being possible to transfer the goods from the distributor to pharmacy without being charged. According to legislation, from 1 st of January 2017, the pharmacy and distributor must become separate entities and therefore are bound to have different management. In this way, there will not be possible anymore to export medicines that are in pharmacies and the possibility to appear counterfeit medicines will be reduced. 3
Also, the Competition Council considers necessary to develop a methodology to define more clearly the concept of public service. This would clarify the existing legal framework and would lead to behaviour self-assessment of companies who have this obligation by law. The Competition Council is working closely with ANMDM to identify causes of the lack of medicines on the market and to develop a new methodology for verifying the compliance with the public service obligation. In order the Romanian patients to have access to new, efficient medicines, the Competition Council recommended the inclusion of a medicine on the reimbursement lists once it received marketing authorization and price decision. As regards generic medicines, the Competition Council claims that their prices should not be affected permanently by the price of correspondent innovative medicines. The Competition Council considers that after the patent expired, there should be a genuine competition between innovative and generic medicines, including on price. In order to prevent price discrimination for medicines with the same active substance (International Non-proprietary Names - INN), the Competition Council recommends the same price for generic medicine and for innovative medicine that is no longer under patent Another conclusion of the Report is that not all producers have updated the medicine price according to regulations in force (Order 75/2009). Thus, the minimum amount collected in addition, in 2014, by producers, reached approx. lei 467 million (approx. Euro 103 million). As a result, total sales in Romania were higher and overcoming of the allocated budget for medicines was supported partly both by companies that have updated prices through the claw-back tax, and by patients through co-payment, depending on the degree of medicines compensation. According to legislation in force, the medicines price in CaNaMed (National Catalogue of prices for human use medicines with a prescription) is valid for a limited period, respectively a year, calculated from the date of the Ministry of Health s authorization and must be less or equal than the price of the same medicine from the list of 12 countries with which the comparison is made. Romania is also the reference country for medicine prices in other EU Member States. 4
Therefore, low prices in Romania could affect prices in other countries for which Romania is the reference country. A possible solution could be keeping the prices in Pricing Public Catalogue at higher level, which is a reference for other countries, while the reimbursement to be made at a lower price. The Competition Council considers that claw-back tax must be applied differently for generic medicines and for those that are not under patent anymore in comparison with new medicines that are more expensive and involves a fiscal effort. A lower claw-back tax for generics could keep them on the market. Given the changing of distribution systems implemented by certain producers lately, there was analysed the impact of DTP systems (direct-to-pharmacy) and restricted by distribution. Whatever the distribution system is, if the producer is dominant, the advantages at the pharmacy / hospital level and patient must be similar to those previously recorded and must be measurable at all levels: quality, service level, financial advantages and availability just the change of the distribution system not to be regarded as abuse of dominant position. In conclusion, the Competition Council does not recommend the use of a distribution system in the detriment of another, but will intervene on certain markets opening investigations in the event that there are clues on distortion of competition. In this context, the Competition Council opened an investigation on a possible abuse of dominant position of Novartis Pharma Services Romania SRL by implementing a pilot project for direct distribution to certain pharmacies, alongside with traditional distribution. During the investigation, there was carried out an unannounced inspection at the premises of Novartis Pharma Services Romania SRL. The gathered documents are under analysis of the Romanian competition authority according to specific investigation procedures. Also, the Competition Council analyses the possible violation of competition law by GSK Romania, through the implementation of a system of direct distribution to pharmacies. The Competition Council considers the pharmaceutical field as a priority and will continue to monitor the market to identify any malfunctions that may affect the competitive environment or the patient. 5
The sector inquiry report is launched for public consultation on the website of the Competition Council, www.consiliulconcurentei.ro. The interested parties may submit comments on the report until July 1, 2016 to the email address bunuri.consum@consiliulconcurentei.ro. Innovative medicine is a brand new medicine protected by patent when launched on the market. Generic medicine contains the same active substance as innovative medicine but is not protected by patent anymore. June 2016 Press Office Tel.: 0372/129710; 021/405.44.29 Email: presa@consiliulconcurentei.ro 6