ACM closes investigation into drug manufacturer AbbVie, competitors get more room now

Drug manufacturer AbbVie has stated that it will not force hospitals to purchase exclusively or to a large extent from AbbVie through discount schemes (or rebate programs). AbbVie has made these assurances following an investigation conducted by the Netherlands Authority for Consumers and Markets (ACM). This ensures that, once a patent has expired, there will be more room for new competing drugs (biosimilars). With these assurances with regard to AbbVie’s discount policy in tender processes, ACM has closed its investigation into anti-rheumatic drug Humira, and into possible abuse of a dominant position by AbbVie.

Martijn Snoep, Chairman of the Board of ACM: “In general, competition should be freely allowed to produce lower prices, but especially so when a patent expires. Discounts offered to hospitals by former patent owners on the condition of exclusive purchase agreements exploit the fact that there will always be a group of patients that cannot or do not want to switch to another drug. This severely hinders effective competition. It is good that AbbVie has now confirmed it will not use any exclusive purchase obligations. This is necessary for keeping prescription drugs affordable and accessible, and for ensuring that sufficient incentives remain to make investments.”

What was the problem?

In late-2018, the patent on the active ingredient adalimumab, which AbbVie uses in Humira, expired in the Netherlands. This drug is widely prescribed for rheumatism, psoriasis, and Crohn’s disease, among other conditions. Until the patent expired, this drug had the highest turnover of all drugs in the Netherlands. Since October 2018, other drug manufacturers have been allowed to produce generic variants of the active ingredient, and to market so-called biosimilars.

In order to maintain its position on the market, AbbVie, after the patent expired, offered hospitals discounts that, according to ACM, mandated exclusive purchasing for existing patients;. Hospitals could only get a significant discount if all existing patients continued to use Humira, and not switch to a biosimilar. If a hospital did allow some of its patients to switch to a biosimilar, the discount would lapse. According to ACM, switching to a biosimilar would thus be financially unattractive for hospitals, because it would remain necessary to purchase a certain amount of Humira for those patients who cannot or do not want to switch. The hospital would then have to pay significantly more.

ACM’s investigation

In 2019, ACM launched an investigation into the discounts that AbbVie in 2018 offered hospitals. This investigation was prompted by indications and reports that ACM received in its sector inquiry into anti-rheumatic drugs. Based on its investigation, ACM has come to the conclusion that AbbVie, as former patent owner, sought to make it harder for biosimilar manufacturers to enter the market.

In this case, the harm caused by this conduct has remained limited because, following a complaint filed by a competitor, AbbVie immediately dropped the conditions of its discounts. Continuation of this conduct would have been particularly harmful to drug affordability, and would have reduced the investment incentives for biosimilar manufacturers.

AbbVie’s response to ACM’s findings

ACM has presented its findings to AbbVie. AbbVie does not endorse ACM’s findings, but has indicated that it finds fair competition to be important. That is why AbbVie has indicated that, in commercial contracts, it doesnot include any obligations to purchase exclusively from AbbVie or any clauses that may have a similar effect. In addition, AbbVie has provided further clarifications, which are fleshed out below, in order to prevent competition rules from being violated.

1. AbbVie ensures that, in procurement procedures, commercial adalimumab offers do not contain any obligations to purchase exclusively from AbbVie nor any clauses that may have a similar effect. No clauses regarding the purchase of residual volumes will be included nor any other inappropriate conditions. AbbVie’s offers for hospitals and other buyers will be formulated clearly.
2. AbbVie will remove the reciprocal termination clause from its adalimumab agreement with hospitals, so that AbbVie is unable to terminate agreements without a breach of contract by the hospital.
3. AbbVie will tighten its compliance policy and compliance training, specifically focusing on proper and ethical conduct in procurement procedures, which includes not asking hospitals and other buyers about offers made by competitors and/or their prices. Compliance training ja ikwill be given at least once a year. This type of training will be geared towards the relevant commercial positions, and will include specific tests (including practical tests).

ACM will check whether AbbVie actually does all of the above. ACM expects that this will enable hospitals, patients, and insured to benefit from the improved market-entry opportunities for biosimilars.

Working together towards better competition

Competition in the pharmaceutical industry helps promote innovation and drug affordability. ACM will continue to keep a close watch on drug prices. If manufacturers use discount schemes to protect their dominant positions and to exclude competitors from the market, their actions will constitute violations of competition rules. ACM is calling on hospitals, health insurers, and drug manufacturers to file reports with ACM about such schemes. In the second half of 2020, ACM will organize an informational meeting or webinar for drug buyers working at hospitals in order to help them spot such practices early, and to help them prepare themselves better against such practices.

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