Global Antitrust in 2024: 10 key themes

Life sciences has been – and is likely to remain – an enforcement priority for antitrust authorities across the globe

Antitrust authorities worldwide have pursued an aggressive enforcement agenda in the life sciences space in recent years. Sustained political focus on affordable access to medicines, budget pressures on national health services and a desire to enable innovative biotechs and generics to compete head-on with big pharma companies means that we expect regulators to continue to pursue enforcement action in the life sciences sector in 2024. Regulatory enforcement in the industry spans both exploitative and exclusionary practices. We have seen regulatory interest in, for example, traditional patent settlement cases (in particular “pay for delay” arrangements) and pricing abuses, as well as novel patent misuse concerns and denigration/disparagement cases. For example, the European Commission (EC) is investigating Teva for allegedly misusing the patent system and disparaging its competitors to protect its multiple sclerosis medicine Copaxone and is investigating Vifor Pharma for the dissemination of misleading information on competitor products. In the US, the Department of Justice (DOJ) Antitrust Division’s and Federal Trade Commission’s (FTC) attention to the life sciences space remains robust, with both agencies emphasizing the importance of the pharmaceutical sector to consumers. In China, the life sciences sector continues to be a prominent focus on the enforcement agenda of the State Administration for Market Regulation (SAMR), with heightened scrutiny of pricing-related conducts.

Resurgence in conduct-based antitrust enforcement

Commercial practices are coming under increasing scrutiny, with regulators across Europe, the US and Asia initiating proceedings focused on traditional antitrust practices, including unfair and excessive pricing, particularly in the wake of significant concerns as to the affordability of medical services and products. In the UK, a series of excessive pricing cases brought by the Competition and Markets Authority (CMA) have recently been upheld by the first instance specialist appellate court (the Competition Appeal Tribunal) with respect to liothyronine tablets and hydrocortisone tablets. Given that excessive pricing cases are notoriously difficult to bring for regulators, the CMA’s recent wins on appeal are expected to embolden it to continue to pursue enforcement in this area.

In the US, perceived high drug prices – including for generics – have prompted continued DOJ enforcement action against generic drug price-fixing, potential FTC challenges to Orange Book patent listings under the Food and Drug Administration’s regulatory process, and increased attention to bundling and bundled discount practices. In China, SAMR has persistently pursued enforcement action with respect to excessive pricing of active pharmaceutical ingredients (APIs), such as levocarnitine API, as well as resale price maintenance in the distribution of drugs and medical devices such as dental implants. This resurgent interest in traditional antitrust theories of harm means companies should ensure that their commercial practices and conduct continue to be compliant with antitrust rules.

Competition authorities have raised behavioral antitrust considerations in merger reviews, with the risk of triggering standalone antitrust investigations

The revised Merger Guidelines in the US (US Merger Guidelines), finalized by the DOJ and the FTC in December 2023 (see Theme 2), make clear that the agencies will consider both prior antitrust violations or allegations of the merging parties and the potential for a merger to entrench or extend a dominant position, including via conduct such as bundling across the parties’ portfolios. While ultimately settled, the FTC’s challenge to Amgen’s acquisition of Horizon exemplifies these themes in the life sciences sector.  

What this means for life sciences and pharmaceutical companies

Companies should revisit their compliance policies to ensure that these account for “traditional” antitrust risk areas as well as novel theories of harm, including regular updates to reflect evolving rules and antitrust enforcement trends. This includes, for example, ensuring that policies are in place to ensure that antitrust risk is mitigated across all aspects of day-to-day operations, including with respect to pricing and discounting, patent strategies and settlements, and agreements with distributors and competitors for the purposes of jointly developing new products. Awareness of these issues across core business teams (e.g., go-to-market and pricing teams, sales representatives, and patent attorneys) is key to mitigating risk. Similarly, these teams should ensure clear and appropriate communications in dealings with counterparties to avoid inadvertently raising antitrust concerns (e.g., disparagement-type concerns).

Artificial intelligence: the interplay between life sciences and digital markets

Companies should also ensure that compliance policies consider the interplay with other laws and regulations, such as IP and patent laws, and in Europe, the General Data Protection Regulation, the Data Act and the AI Act. Applications using AI technology are becoming increasingly commonplace across all industries, and the life sciences sector is no exception. For all the promise that AI holds for the sector, there are several legal challenges and risks that businesses should be aware of. For example, final adoption of the EU’s long-anticipated AI Act – which will have a significant impact on the ongoing use and development of AI in the industry – is expected imminently. In particular, companies that develop or operate medical devices – which are expressly covered by the AI Act – will become subject to far-reaching requirements, including compliance with self-assessment processes, testing procedures and the creation of technical documents. Regulators around the world are alive to the disruptive impact that AI technology can have across the economic value chain, and we expect that the use of AI technology by life sciences and pharmaceutical companies will be subject to close regulatory scrutiny (see Theme 4).