Combination Therapies in Pharma – Removing the Antitrust Roadblock

This month, the Belgian Competition Authority (BCA) published guidance on information exchange between pharmaceutical companies in the context of the reimbursement application procedure for combination therapies. This follows a prioritisation statement adopted by the UK Competition and Markets Authority (CMA) in 2023 on the same issue and long-standing demands from the Belgian pharmaceutical industry.[1] In this blog post, we explain why there was a need for the BCA and CMA to adopt guidance in this area, what their guidance covers, and what key takeaways can be drawn from these two publications.

Why reimbursement rules make coordination necessary

Combination therapies consist in combining two or more active pharmaceutical ingredients together, generally to increase the effectiveness of the treatment. They typically involve a “backbone” component, i.e. a medicine that was already being used as a monotherapy, and one or more “add-on” components, i.e. medicines that are combined with the backbone component to form the combination therapy.

Depending on the local rules on approval and reimbursement, manufacturers of the backbone and add-on components may to varying degrees be required to cooperate and exchange information to secure regulatory approvals and reimbursement prices for the combination therapy. The nature and scope of the cooperation can vary from one country to another, reflecting differences in regulatory procedures. And so can the antitrust issues relating to such cooperation.

The Potential Antitrust Roadblock

In most cases, the cooperation or exchange of information between manufacturers should not raise competition problems, e.g., because the two drugs are often complementary rather than substitutes and because the purpose of any such cooperation is to introduce a new treatment, which is in essence pro-competitive.    

However, when manufacturers are actual or potential competitors, some caution should be applied, as the exchange of commercial information can restrict competition.  But because antitrust rules regarding the exchange of information between actual or potential competitors are notoriously blurry (not to say very unclear), there is also a risk that companies adopt too conservative positions, which in turn may hinder the introduction of innovative treatments. Both the UK and Belgian authorities identified that risk in their recently published guidance, and their attempt to clarify the boundaries of what is permissible is indeed most welcome. We review below the issues raised by the Belgian and UK systems, and the related guidance given by the authorities.

The UK “pricing squeeze” problem

In the UK, the main issue identified in the CMA guidance relates to pricing.

Medicines in the UK are subject to a uniform pricing rule. This means a medicines supplier negotiates a single net price across all therapeutic uses, irrespective of whether it is used as a monotherapy or in combination. By the time it is considered for a combination therapy, a backbone medicine will already have gone through a cost-effectiveness test by the relevant health technology assessment (HTA) agency for use in a monotherapy. The confidential net price of the backbone medicine may already be close to the cost effectiveness threshold, leaving little, if any, room to accommodate the additional cost of the add-on treatment. The supplier of the backbone component will also be disincentivised by the uniform pricing rule to lower its price when applying for reimbursement for the combination therapy.

The add-on medicine supplier, who applies for reimbursement approval for a combination therapy, will thus be “squeezed” between the backbone medicine price and the cost-effectiveness threshold.  This means that in some circumstances the price that the add-on supplier would need to apply for can be so low that it would make it completely unviable to bring the product to market as part of a combination therapy. Hence the risk that innovative treatments are not introduced to patients.

To address this issue, the Association of the British Pharmaceutical Industry (ABPI) proposed a negotiation framework for use in combination therapies. Under that negotiation framework, the suppliers of the component medicines negotiate to agree an amount per patent (the “contribution payment”) to be paid from the backbone supplier to the add-on supplier when the backbone medicine is supplied as part of the combination therapy. The information exchanged between the suppliers is limited to what is strictly necessary to reach agreement on the contribution payment, including:

• Combination therapy and expected indication
• HTA agency evaluation timelines and requirement for response
• Treatment pathway / line of therapy, including comparators / standard of care
• Expected patient population numbers and assumed duration of treatment
• The sum (in pounds) that the add-on company requires per patient to make their own (confidential) discount sufficient for a positive HTA agency evaluation and commercially viable. This sum can be subject to negotiations between the parties.

Recognising the need for such cooperation, the CMA issued a “prioritisation statement”, essentially setting out the circumstances in which the CMA would not prioritise an investigation into commercial arrangements underpinning the bringing to market of combination therapies. In particular, the CMA confirmed that it would not prioritise investigations of the exchanges of information in the commercial negotiations or any subsequent agreements related to the payment of contribution payments if the ABPI negotiation framework is followed, and the parties refrain from sharing net prices or otherwise fixing the prices of either of the components.

The Belgian Coordination Problem

In Belgium, only the add-on medicine supplier can submit a reimbursement application to the National Institute for Health and Disability Insurance (NIHDI). Only once the add-on medicine has been approved can the backbone medicine start its own procedure to adapt its reimbursement conditions to allow reimbursement in the context of combination therapy. This procedure leads to a lack of predictability for pharmaceutical companies. In particular, the manufacturer of the backbone medicine does not know in advance how the reimbursement conditions for its product may be adjusted following approval of the add-on medicine. In addition, the sequential nature of the process has been considered a source of inefficiencies.

To solve this problem, NIHDI is now considering the introduction of a specific reimbursement application procedure for combination therapies under which applications would be made individually and in parallel by the backbone and add-on manufacturers. Since such manufacturers would likely be required to share commercial information as part of this proposed procedure, the BCA was asked to issue guidance to help companies identify more clearly what can and cannot be exchanged.

After a reminder of the (not necessarily helpful) case law on information exchange (Sections IV.1 and IV.2), the BCA communication provides a list of data and information which should in principle be “exchangeable” in the context of a procedure before the NIHDI:

• Purpose of the application
• Administrative data concerning timelines for the procedure
• Comparators / standard of care used to demonstrate therapeutic efficacy of the combination therapy
• Expected patient population numbers and incidence of the disease, assumed duration of treatment, dose intensity in the clinical trial
• Summary of therapeutic value
• Analysis of budgetary impact of the proposal from the perspective of the NIHDI and the patient based on volume and incidence data and ex-factory (list) price (if publicly available) set by the Price Department of the Federal Public Service Economy for each component (so-called level 1 budget impact).

By contrast, the following (blacklist of) information is considered neither strictly necessary nor proportionate to the objective of a request for reimbursement of a combination therapy and that therefore should not be shared:

• Cost structure information
• Net price and gross and net margins of the component medicines
• Strategic information around marketing, investment and future plans
• Specific market data such as data concerning suppliers or customers
• Information on the distribution of therapeutic value among the components
• Analysis of the budgetary impact on the medicine budget (level 2 budget impact) and on the healthcare budget (level 3 budget impact): financial details and cost projections, information on changes in volumes/turnover of one of the components of the combination therapy that have an impact on the negotiation with NIHDI about the net price of each of the components of the combination therapy.

More generally, the companies involved cannot exchange information from which their respective commercial strategy could be inferred.

The BCA further recommends the appointment of an internal team responsible for implementing and monitoring the procedure, traceability of access to information (including limiting such access to those persons who are essential to the process), and putting in place clear internal compliance protocols. The companies must also ensure that data is stored securely and, if the procedure fails, destroyed appropriately.

Key takeaways

At a high level, the guidance in both countries conveys the authorities’ recognition that some cooperation is necessary for the efficient conduct of regulatory procedures and to eventually bring combination drugs to market. This is a welcome development, especially given the risk identified by both authorities that some drugs may never hit the market because of a (perceived) antitrust roadblock.

That said, we could have hoped that the BCA, for example, states more affirmatively that cooperation in this space is generally pro-competitive and raises little (to no) risk when the parties involved are not competitors. The use of expressions such as “less problematic” (BCA, §29) reflects, in our view, unnecessarily cautious language when the benefits of cooperation are so obvious.

What is also unhelpful, especially in the BCA guidance, is the (excessive) repetition of some of the mantras of European case law regarding information exchange, which, taken out of context, often act as bogeymen. Many of these statements, taken from cases involving covert cartels, are simply so broad and unclear that, on a conservative reading, they can easily be over-interpreted and lead to excessively restrictive advice. In that sense, the CMA guidance appears more pragmatic, targeted and helpful in that it essentially blesses a specific form of cooperation developed by the industry. To be fair, the task of the BCA was probably harder, as they were asked to provide guidance in an abstract context, whereas the CMA reviewed the specific framework proposed by the ABPI.  

There is an additional concern. In both cases, the guidance effectively “block exempts” the exchange of specific information: in the CMA case the ABPI negotiation framework, and in the BCA case the “white list” of information that the BCA deems “exchangeable”. That is fine for those combinations where nothing more is needed. But it risks de facto ruling out forms of coordination that are objectively necessary in more complex situations. Such forms of coordination may be justifiable because of how they enable pro-competitive and pro-patient outcomes. Where the benefits of coordination appear to be substantial and the issue highly specific, can we expect competition agencies to be more ambitious in helping businesses deliver those benefits? Regardless of their weaknesses, the guidance in the UK and Belgium paves the way for other countries or, even better, the EU, to adopt similar measures to ensure that the market entry of combination therapies across the EU is not unduly hindered by regulatory roadblocks. This also contributes to a healthy investment climate in the life sciences, a sector in which the EU is still a global leader.

[1] See, in particular, here.