Under biosimilar assault in Europe, Merck rolled out cut-rate deals on Remicade to defend its brand from cheaper options, then-brand-new to the market. Now, the U.K.’s competition authority claims the pharma giant “broke competition law” by lowering the med's price.
In a statement of objections issued on Tuesday, the U.K.’s Competition and Markets Authority (CMA) says Merck abused a “dominant position through a discount scheme for Remicade that was likely to restrict competition from ‘biosimilar’ versions of infliximab that were new to the market.” Merck is known as MSD outside of the U.S.
Discount deals are among the tactics Big Pharma is using to counter competition from biosimilar rivals—and increasingly so, as more of the knockoff drugs launch. Johnson & Johnson, now facing a Remicade biosimilar in the U.S., has said its own aggressive deals with payers will help the brand preserve sales. That sort of attempt is possible with biosimilars, as opposed to ultracheap small-molecule generics, because the more complex knockoffs tend to be priced around 15% lower than the brand, within the realm of payer dealmaking.
The CMA’s findings are provisional, and the New Jersey drug giant now has a chance to respond before any punishments are issued. Merck said in a statement that it’s “confident that the proceedings will show that MSD has complied with competition law at all times. The discounts in question meant that infliximab was competitively priced and offered savings to the UK National Health Service, without hindering competition.”
The CMA opened the case in December 2015, gathering info throughout the probe and deciding on three occasions to proceed with the investigation, according to a timeline.
Merck doesn’t deny that it discounted Remicade—a blockbuster immunology med licensed from Johnson & Johnson for sale outside the U.S.—in the face of new biosimilar competition from Pfizer’s Hospira. Indeed, after that company launched its biosim back in February 2015, Hospira quickly secured market share with aggressive pricing, forcing Merck to compete for contracts.
On a quarterly basis throughout 2016, Merck reported Remicade sales declines because of the competition; in September, Biogen launched a second biosimilar version, a development that could drive prices down even more.
The U.K.’s competition authority has been busy looking into the pharma business lately. Late last year, it fined Pfizer a record $108 million for entering a licensing deal that triggered a 2,600% price hike.
Since then, the CMA has targeted Actavis for “excessive and unfair prices” on a generic and for “illegal” deals with Concordia Pharmaceuticals to delay competition. The authority also went after local drugmaker GlaxoSmithKline in February 2016 for alleged pay-for-delay agreements, issuing a $54 million fine in that case.