ACM wishes to have more opportunities for unbranded prescription drugs

Having affordable prescription drugs is crucial for keeping health care costs under control. The Netherlands Authority for Consumers and Markets (ACM) has established that, around the world, manufacturers of brand-name drugs sometimes impede the entry of cheaper, unbranded drugs. That makes drugs unnecessarily expensive. In some cases, the Dutch Competition Act can be used, but it is unable to combat all instances of harmful behavior of drug manufacturers. ACM has published a description of the drug market and of the entry of unbranded drugs. With regard to the new generation of drugs, too, ACM will continue to keep a close watch on developments and trends.

Market for prescription drugs

Brand-name drug manufacturers use different marketing techniques and selling techniques to sell their patented drugs to consumers. Patents offer businesses the opportunity to recoup the costs they incurred for inventing these drugs, and are thus important for innovation. But sometimes, a brand-name drug manufacturer extends the patent on a drug by introducing marginal improvements to it in order to secure his market position. Then there are brand-name drug manufacturers that pay their competitors to refrain from introducing their cheaper, unbranded drugs. And yet another method used by drug manufacturers is increasing their revenues by influencing physicians and specialists.

ACM has established that some drug manufacturers in the Netherlands had sold drugs in hospitals at a deep discount. At the same time, patients tend to continue to use the same brand that they had been given by their hospitals. The hospital price, however, is just a fraction of the pharmacy price of these brand-name drugs. So by taking advantage of this behavior, drug manufacturers are able to increase their profits at the expense of cheaper, unbranded drugs, but that are of the same quality.

Fair competition

Competition is needed in the drug market too. That is good for innovation, prices, and drug quality. If drug manufacturers impede competition, consumers ultimately lose out. Sometimes, a brand-name drug manufacturer can be dealt with using the Dutch Competition Act. But sometimes, it is not possible, and then it is up to other parties to keep the costs of drugs under control. For example, general practitioners and specialists could prescribe cheaper, unbranded drugs more often. Or more unbranded drugs could be included in the basic package of health insurances as the standard drug.

The drug market is very dynamic. ACM primarily focused on drugs that are sold in high volumes. The new generation of drugs combats, for example, specific types of cancer or arthrosis. The costs of these drugs per patient are high, and few are manufactured because these diseases are not that prevalent. ACM will keep a close watch on the marketing techniques and selling techniques used by drug manufacturers for this new generation of drugs too, and will also examine whether competition regulations are violated, and whether the costs of drugs are increasing unnecessarily.