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

1. 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

2. 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

3. Gaps in Policy Direction (1) [Right to health takes precedence over commercial interest] IGWG-GSPA-PHI Negotiations

4. Gaps in Policy Direction (2) “Development” remaining a undefined term

5. 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)

6. 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

7. 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

8. 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

9. CL/P-Health Sector • Pharmaceuticals • Medical Devices • Health Services • Health Insurance • Public Health Procurement

10. 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)

11. CL/P-Pharma (2)Exorbitant trade margins (CUTS Study, 2006)

12. 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)

13. CL/P-Pharma (3)(M&As)

14. CL/P-Pharma (4)(M&As) • Public health concerns • Many 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

15. 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

16. 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

17. 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

18. 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. • RashtriyaSwasthyaBimaYojna – pro-competition and is likely to change scenario

19. Global initiatives on competition • WTO Working Group on Interaction b/w trade and competition • UNCTAD is doing lots of work • WIPO Development Agenda

20. 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

21. THANK YOU ujjumish@hotmail.com Above all do not compete – Lao Tsu