Excessive pricing of pharmaceuticals in EU law: Balancing competition, innovation and regulation

Although still contested by some, the application of excessive pricing in the pharmaceutical sector has emerged as a relevant and useful tool for competition authorities in the European Union. Not aiming to be a price regulator does not stand in the way of acting against clearly unmerited high prices. Arguably the main concern of the application of excessive pricing is its potential harmful effect on innovation. This explains why exploitation abuses so far have been found in cases where innovation played at most a marginal role. In an earlier book chapter we argued that excessive pricing may also be applied in the context of regulatory exclusivity (e.g. patents and orphan protection), as long as innovation incentives are taken into account. The first theme of the present book chapter concerns how innovation has been dealt with methodologically in the excessive prices cases under EU law so far, and to what extent there might be a risk of hampering innovation incentives. The second theme in this chapter will be the relationship between excessive pricing and regulation in pharma. Specifically, we will look at what the cases may teach us on regulation. Rather than thinking of regulation and competition policy as alternative routes to tackle unfairly high prices, we think they should be seen as complementary. Regulation in pharma has among others to strike a balance between innovation incentives and affordability. Incidence of excessive pricing can be seen as a signal of unbalance that ultimately needs to be redressed in regulation.