CNMC decision in the Pfizer/Spain pharma case
January 2017
On 19 January 2017, the Council of the Spanish Markets and Competition Commission (the “CNMC”) decided to bring to an end the infringement proceedings initiated against PFIZER, S.L.U. (“PFIZER”) and Compañía Farmacéutica Española, S.A. to analyse if PFIZER’s contracts with its wholesale distributors applying a free price system amounted to a “dual price” system prohibited by Article 1 of the Spanish Competition Act (the “LDC”) and Article 101 of the Treaty on the Functioning of the European Union (the “TFEU”) (the “Decision”).
The ruling
According to the Decision, the free price system PFIZER applied in its contracts with wholesalers does not amount to a conduct prohibited by Article 1 LDC (and Article 101 TFEU, although the Decision does not expressly refer to this provision in the ruling).
Background
On 21 May 2009, the Spanish Competition Commission (the “CNC”, predecessor of the CNMC) had already decided to close preliminary investigation proceedings (initiated further to a complaint from Spain Pharma, S.A. (“SP”)) related to the alleged anticompetitive nature of PFIZER’s contracts. However, SP appealed this 2009 decision before the Spanish National Court (the Audiencia Nacional or “AN”).
On 13 June 2011, the AN partially upheld SP’s appeal and partially overturned the CNC 2009 decision. Cassation appeals before the Supreme Court (the “TS”) followed but, on 3 December 2014, the TS ruled that there was no ground for such cassation appeals.
As a result of the TS judgment, the CNMC initiated the infringement proceedings against PFIZER and COFARES.
Main legal grounds
The free price system derives from the Spanish price control regulations
The CNMC, in line with the CNC 2009 decision, acknowledges that the Spanish regulatory framework on medicine pricing has evolved significantly: from a situation of full intervention (in every sale of a medicine in the Spanish market) to a situation where price control only applies to products dispensed in Spain within the Spanish national health system (“NHS”). Since 2000, pharmaceutical companies freely determine the sale price of their medicines, other than when the intervention requirements are met (dispensation in Spain and reimbursement within the NHS).
The CNMC Decision concludes that the contracts that PFIZER entered into with its wholesale distributors do not result in a dual price system dependent on a medicine’s destination, but rather a single price unilaterally fixed by PFIZER, in accordance with its constitutional freedom to set the prices of its products, which is automatically replaced by the intervened price upon verification that the requirements for price intervention have been fulfilled.
Thus, there are never two prices determined at will by PFIZER (which is an essential condition for dual pricing to exist). Rather, in the CNMC’s opinion, the Spanish regulatory framework requires pharmaceutical companies to apply different prices, and therefore, the coexistence of the two prices for PFIZER’s medicines is not attributable to a voluntary decision of PFIZER.
Glaxo case not applicable by analogy
Following the express mandate of the TS, in the Decision the CNMC analyses PFIZER’s free price policy in light of the Glaxo doctrine and concludes that while Glaxo applied dual pricing (in the antitrust sense), PFIZER did not. The CNMC declares that while prima facie there may be an apparent similarity, there are significant differences between the two cases (regulatory framework, objective of the policy, type of information exchanged, etc.) and hence the Glaxo doctrine does not apply to PFIZER’s case.
Efficiencies
The CNMC briefly refers to the analysis of potential efficiencies derived from PFIZER’s free price system, although it acknowledges that this is no longer relevant in light of its conclusion that the free price policy has neither the object nor the effect of restricting competition.
The CNMC does however state that prima facie itcould be argued that efficiencies in the form of fewer medicine shortages in Spain could derive from the free price policy.
