CHINA —China’s market regulator recently took action against two pharmaceutical companies, imposing fines and confiscating illegal revenue for engaging in monopolistic practices.

Grand Pharmaceutical was fined 136 million yuan (US$19.68 million) and had 149 million yuan (US$21.05 million) of “illegal revenue” confiscated for entering into a monopolistic deal with Wuhan Healthcare Pharmaceuticals.

Wuhan Healthcare Pharmaceuticals, on the other hand, received a fine of 4.13 million yuan (US$0.6 million) and had slightly over 30 million yuan (US$4.2 million) of its revenue confiscated.

One aspect of antitrust violations in the pharmaceutical industry relates to excessive pricing. In November 2022, Tianjin Jinyao, a subsidiary of Jingyao Pharmaceutical, was found guilty of abusing its dominant position by selling carmustine injections at excessively high prices.

The competition authority proposed a fine of RMB27.72 million (US$3.92 million) for this offense. Notably, this is not the first time Jingyao Pharmaceuticals has faced penalties for breaching antitrust rules.

In April 2021, then known as “Tianyao Holding,” the company was fined a total of 44.02 million yuan (US$6.22 million), including both a fine and the confiscation of illegal proceeds, for engaging in a market sharing and price fixing cartel.

Resale price maintenance (RPM) is another area scrutinized by Chinese competition authorities. In June 2022, an amended Anti-monopoly Law came into effect, where RPM is no longer automatically deemed illegal.

However, in July 2022, Eshun Pharmaceutical was fined for engaging in RPM arrangements that had not yet been implemented.

This case demonstrates that competition authorities monitor not only implemented RPM conduct but also detect and review agreements that have yet to come into effect. It is evident that the authorities’ stance on RPM has not softened.

China’s antitrust crackdown has gained significant momentum since late 2020, primarily targeting various industries, including prominent technology companies like Alibaba Group.

The pharmaceutical sector remains a priority, and the European Commission (EC) also focuses on this industry to protect innovation.

Some notable developments in 2022 include the Illumina/Grail merger, which the EC prohibited, the ongoing investigation into Teva Copaxone, and the investigation into Vifor for alleged abuse of dominance through disparagement campaigns against competitors.

Additionally, in the Servier pay-for-delay case, AG Kokott proposed that the Court of Justice (ECJ) should consider all settlement agreements concluded by Servier with generics as restrictions of competition by object.

The EC, along with the Swiss competition authority, launched an antitrust investigation into Novartis regarding its conduct relating to a patent in the dermatology treatments field.

The outcomes of these investigations are expected to significantly impact how pharmaceutical companies handle patent prosecution and compete with rivals.

Moreover, other jurisdictions have witnessed actions against excessive pricing. In July 2022, the UK’s Competition and Markets Authority (CMA) fined Pfizer and Flynn £70 million (US$86.4 million) for charging unfairly high prices for Phenytoin sodium capsules, used in epilepsy treatment.

The Spanish National Markets and Competition Commission (CNMC) has also shown increased interest in the pharma sector.

For instance, Merck received a fine of €38.9 million (US$41.7 million) for abusing its dominant position in the Spanish market for contraceptive vaginal rings, and Leadiant was fined €10.2 million (US$10.9 million) for excessive pricing of an orphan drug for the treatment of cerebrotendinous xanthomatosis (CTX).

These enforcement actions highlight the global efforts to regulate and address antitrust issues in the pharmaceutical industry.

Authorities are vigilant in tackling monopolistic behavior, excessive pricing, and other anticompetitive practices to safeguard fair competition, innovation, and patient interests.

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