On 10 February the European Commission (EC) accepted commitments to resolve the long-running investigation into Aspen Pharmaceuticals.  The commitments require Africa’s largest pharmaceuticals company to (1) reduce its prices to wholesalers in Europe (for six cancer medicines) by, on average, 73% and keep them below a price ceiling for ten years; and (2) continue to supply those off-patent medicines for at least five years.

The decision to accept the Commitments represents sensible and pragmatic decision making by the EC:

  • As the EC recognises, it sends “a strong signal to other dominant pharmaceutical companies not to engage in abusive pricing practices".
  • It avoids a significant fine that may well have resulted in higher ex post prices than the commitments were able to secure. 
  • It avoids the costs and uncertainty of lengthy court litigation on whether the analysis of excessive pricing was correct.

The EC’s decision is consistent with the approach taken by the CMA in Essential Pharma and the Danish Competition Authority’s in CD Pharma.  In both cases, punitive measures were not pursued, presumably to ensure the same positive externalities. Pfizer/Flynn, which has been remitted back to the CMA by the UK courts is, in that context, an outlier in the pharmaceutical sector, alongside the Italian Competition Authority’s decision to impose a €5.2 million fine on Aspen for abuse of its dominant position.

A focus on benchmarks

The detailed analysis of the EC’s decision is not yet available, but the press materials confirm that:

  • Aspen earned consistently high profits both in absolute terms and when compared to the profits of benchmark firms.  The EC compared Aspen’s costs, revenues, and profitability with those of 20 other companies of a similar size and profile.  Benchmark comparisons of this type have a long history in European competition law and were recently reaffirmed as valid in the CJEU’s judgment in the Latvian Collecting Societies case.
  • Aspens prices exceeded its relevant costs by almost 300% on average, including when accounting for a reasonable rate of return.  The EC did not say what these rates of return were, but presumably they reflected the economics of the benchmark comparators identified and did not simply ignore the criterion of whether the price was unfair in relation to those comparators (as the CMA has been criticised by the courts for doing in Pfizer/Flynn).
  • The investigation did not reveal any legitimate reason for the profit levels.  Because Aspen’s medicines were off-patent for 50 years, any R&D investment had long been recouped.  In addition, the EC could not correlate the profits with “reward for commercial risk taking” nor with relative cost increases.


The approach of accepting Article 9 Commitments in excessive pricing cases in the pharmaceutical sector produces several positive externalities, including those identified above.  The downsides (e.g. the absence of court review of enforcement action and fewer headline grabbing fines) are, in our view, less significant than the benefits, in particular where, as here, court jurisprudence on excessive pricing is developing in other sectors.

Enforcement in drug markets with supra-competitive pricing despite the loss of patent protection is not surprising and is likely to remain a priority for the foreseeable future.  However, the same type of intervention against originators/innovators is much less robust from an economic and policy objective, given the way it can distort incentives to innovate, in particular in rare diseases. 

The Dutch Competition Authority has suggested that it could contemplate excessive pricing enforcement against innovators.  It will be interesting to see if that transpires in practice and whether it generates support from other European enforcers.  It will also be interesting to see whether the CMA continues to penalise firms for this conduct or chooses a commitments pathway.