Competition Law/Policy and the Consequences for Access and Innovation for Medicines/Healthcare - PowerPoint Presentation

Slide1

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

MRP

PURCHASE PRICE OF RETAILERS

Ranbaxy

Stannist

26

1.80

Cadila

Ceticad

26

1.60

Cipla

Ceticip

27.5

2.00

Lupin

Lupisulide

24

1.94

Wockhardt

Setride

25.2

1.70

Lyka Labs

Lycet

25

1.44

Ranbaxy

Pyrestat-100

25

1.50

Welcure Drugs

Omejel Caps

33

4.50

Wockhardt

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

M

any

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

THANK YOU

ujjumish@hotmail.com

Above all do not compete – Lao

Tsu