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

Competition Law/Policy and the Consequences for Access and Innovation for Medicines/HealthcareGlobalising Asia: Health Law, Governance, and Policy Issues, Approaches, and Gaps!Bangkok 16-18 April, 2012SchemeGaps in policy directionUnderstanding competition law/policy (CL/P) CL/P interface with health sector and related issuesAttempts at global level on competition law/policyConclusions / recommendationsGaps in Policy Direction (1)

[Right to health takes precedence over commercial interest]IGWG-GSPA-PHI NegotiationsGaps in Policy Direction (2)Development remaining a undefined termCompetition LawMain aims:To prevent practices having adverse effect on competitionTo promote and sustain competition in marketsTo protect the interests of consumersMainly deals with:Anti-competitive agreements (collusions/cartels)Abuse of dominanceRegulation 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 competitionCompetition Policy (2)Nine principles of CPTo foster competitive neutrality between public & private sector enterprisesEnsure access to essential facilitiesFacilitate easy movement of goods, services and capitalSeparate policy-making, regulation and operation functions Ensure free and fair market process

Competition Policy (3)Nine principles of CP...Balance competition and IPRsEnsure transparent, predictable and participatory regulatory environmentNotify and publicly justify deviation from competition principlesRespect international obligations

CL/P-Health SectorPharmaceuticalsMedical DevicesHealth ServicesHealth InsurancePublic Health ProcurementCL/P-Pharma (1)(collusion)Collusions b/w pharma companiesE.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 doctorsE.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 AIOCDRectification through invoking CL and/or competition advocacy (removal of asymmetry of information)

CL/P-Pharma (2)Exorbitant trade margins (CUTS Study, 2006)COMPANYBRANDMRPPURCHASE PRICE OF RETAILERSRanbaxyStannist 261.80CadilaCeticad 261.60CiplaCeticip 27.52.00LupinLupisulide 241.94WockhardtSetride 25.21.70Lyka LabsLycet 251.44RanbaxyPyrestat-100 251.50Welcure DrugsOmejel Caps 334.50WockhardtMerizole-20 396.48CL/P-Pharma (3)IP-Competition (Abuse of dominance)Generic competitionUse of TRIPS flexibilities to the fullestStricter patentability criteriaResearch exemptionBolar provisionContd. production of generic mail box applnCompulsory license (access to essential facilities)Parallel importPre and post grant oppositionNo data exclusivityEnforcement measures (counterfeit definition issue)Patent thickets and markush claimsPatent pool (a platform to collude)

CL/P-Pharma (3)(M&As)YearIndian Co taken overForeign Company which took overCountry of originTake over amount USD millionsAug 2006Matrix Lab Mylan USA736April 2008Dabur Pharma Fresenius Kabi Singapore 219June 2008Ranbaxy Labs Daiichi Sankyo Japan 4600July 2008Shanta Biotech Sanofi Aventis France 783Dec 2009Orchid Chemicals Hospira USA 400May 2010Piramal Healthcare AbbottUSA 3720CL/P-Pharma (4)(M&As)Public health concernsMany 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 healthFIPB v. CCI

Medical DeviceDependence on import (India: 75%)Lack/uncertainty of regulation Non-regulatory entry barriersLack of R&D and testing infrastructureLack of skilled work forceHigh capital intensive and lack of access to capitalLack of incentive from governmentIncentivises imports; ready to give higher prices for devices approved by US or EU Higher duty on raw material than on finished productsUnecessary Procurement conditions

Health ServicesCollusion 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 testsLack 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 procurementBid riggingPurchasing directly from manufacturersUnnecessary 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 InsuranceAsymmetry of information leading to moral hazards and hence disincentive for cos.Regulation of provider neededMinimum capital requirement in India Rs.1bnEntry barrier for small community-based insurance schemesLack 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 AgendaConclusion/RecommendationsCL/P can be an useful tool in liberalising economies from public health point of viewPublic 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 mannerDevelop a tool kit on competition in health sector for authorities of respective countriesAustralia has good experience in the region and can have a guiding role

THANK YOU

ujjumish@hotmail.com

Above all do not compete Lao Tsu