Antitrust Alert: Italian Competition Authority Opens Sector Inquiry On Vaccines Competition

Author:Mr Mario Todino and Cecelia Kye
Profession:Jones Day

Over the last few years the pharmaceutical industry in Italy has attracted increasingly intensive antitrust scrutiny. Last month the Italian Competitive Conspiracy (ICA) concluded an important sector inquiry on vaccines for human use, just after the conclusion of two other high profile antitrust investigations in this industry. This sector inquiry focused in particular on "essential" vaccines, those classified as mandatory or recommended by national vaccines plans. This is a 20 billion euro market globally, with an average annual spending of 300 million euro in Italy alone. The ICA has identified several shortcomings relating both to the structure of the industry in general and the specific features of the Italian market. Highly concentrated market. The first critical issue flagged by the ICA is the high level of supply concentration, with four companies accounting for over 80% of the global market in value. For some vaccines taken in isolation, the number of suppliers is even smaller. One reason for the concentration of supply mentioned by the ICA is the essential nature of these vaccines, which the Italian Healthcare System is required to purchase, combined with the lack of clear information on the available vaccines and benchmarking of their therapeutical equivalence. In this respect, the ICA advocated for regulators to adopt clearer and more transparent criteria when choosing the essential vaccines. High degree of patent-related protection. The second critical factor leading to market concentration among a few suppliers is the relatively recent development of innovative vaccines, which still enjoy a high degree of patent protection (as opposed to conventional vaccines for which the patents have expired), thus commanding premium prices. The ICA noted that the high degree of patent protection granted to innovative vaccines derives from the considerable number of additional components to the active substance in the new drugs. In addition, the ICA found that it is technically difficult to produce generic versions of vaccines, as opposed to other traditional patented drugs for which generic versions are usually easily available. The ICA recommends that pharmaceuticals regulators promote competition by easing market entry by generic vaccines or other substitute products, through simplified authorization procedures similar to the bioequivalence pathways that are available to generics of other traditional patented drugs. Product...

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