Statement by Executive Vice-President Vestager on the Commission decision to accept commitments by Aspen to reduce prices for six off-patent cancer medicines by 73% addressing excessive pricing concerns

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Today, the Commission has decided to accept commitments offered by Aspen to reduce the prices of six critical cancer medicines. Aspen committed to reduce prices by 73 percent on average across Europe and also committed to continue supplying these medicines in all countries where they are currently sold. The commitments remove entirely the Commission's concerns of excessive pricing in breach of EU competition rules. This will make Aspen's cancer medicines immediately more affordable, saving European health systems millions of Euros and make the medicines available for people who need it.

The medicines concerned and Aspen's price increases

Aspen's medicines treat serious and rare forms of blood cancers such as some types of leukaemia and myeloma. They date back to the fifties and have been off-patent for decades. Even if they are old they are still used by thousands of patients across Europe. Aspen's cancer drugs are life-prolonging and some are life-saving. Vulnerable patients, such as children and elderly patients are particularly dependent on them for their treatments.

Aspen acquired these cancer medicines in 2009. From 2012 onwards, it progressively started to increase their prices very sharply across Europe. Aspen was able to achieve price increases of several hundred percent because patients and national health authorities often had no real alternative to Aspen's medicines.

When some national authorities tried to resist Aspen's requests for steep price increases, Aspen went as far as threatening to withdraw the medicines from the national lists of reimbursable drugs. In some cases, it gave clear instructions to its negotiation teams that price increases should be accepted or there would be no supplies at all.

The Commission's investigation and competition concerns

The Commission's investigation revealed serious concerns that Aspen has been abusing its dominant market position by charging excessive prices for the cancer medicines since 2012.

The Commission analysed in detail Aspen's costs and prices based on its corporate accounts. Our analysis revealed that following the price increases, Aspen's average profit across Europe was three times higher than the average profitability of other comparable companies.

Aspen's prices exceeded the costs of producing and selling the medicines by almost three hundred percent on average, even after accounting for a reasonable rate of return.

Of course, there can be good reasons for companies to earn high profit margins, for example, to recoup significant investments into innovation. But in the case of Aspen, there was no commercial risk-taking activity, no investment in innovation because these medicines had been off-patent for 50 years. Aspen did not improve the medicines in any meaningful manner, nor their distribution. So there were no legitimate reasons justifying Aspen's price and profit levels. Our preliminary assessment therefore found that Aspen's behaviour was likely to breach EU competition rules.

Aspen's commitments

To address the Commission's concerns of excessive pricing, Aspen offered a broad set of commitments:

First, Aspen will be obliged to reduce its net prices by 73% on average in the European Economic Area. To put the 73% reduction into perspective: on average, Aspen will reduce its prices even below the price levels of 2012, when it first started increasing the prices.

The reduced price levels are a fixed price ceiling. That means that for every medicine in every country, Aspen cannot charge prices above that ceiling. But it is of course free to charge even lower prices. The price reductions are also applicable as of October 2019, when Aspen made its first clear commitment proposal.

Second, Aspen will have to continue supplying the medicines in all countries where they are currently sold, for a guaranteed period of five years. For an additional five years period, Aspen commits to either supply the medicines or, if it plans to discontinue them, it will have to make its marketing authorisations available to other suppliers.

The commitments will be in place for a duration of 10 years. During those 10 years, an independent trustee and the Commission will monitor that Aspen complies with its obligations.

Finally, the commitments cover all six medicines in all countries of the European Economic Area where the medicines are currently sold. The only Member State that is not included in our decision is Italy, because a separate decision covering that country was already taken by the Italian competition authority.

The commitments made binding today will provide for significant, immediate and long-lasting price decreases for all the medicines and all the countries covered by our preliminary investigation. And they will ensure the continued supply of the medicines covered by the decision.

Input from national stakeholders

Before adopting today's Decision, the Commission received valuable input on Aspen's commitments from many stakeholders. These included, in particular, national pricing and reimbursement authorities, Ministries of Health, health insurers as well as patient and consumer associations. Their contributions were extremely valuable to make sure that Aspen's commitments work in practice in each of the 27 health systems across Europe.

This cooperation ensured that the commitments would be implemented fast, effectively and for the long-term.

Today's decision in the wider perspective

Before closing, I would like to underline the significance of the Aspen decision, as it is the Commission's first excessive pricing decision in the pharmaceutical sector. The decision provides clear guidance on the circumstances in which prices are excessive.

It does not really matter whether the starting price is “high” or “low”. What is decisive is whether profits are excessive and whether there are any legitimate reasons for them. High prices are not necessarily excessive and low prices can be excessive.

Having said that, as a competition authority, it is not our role to be a price regulator. In markets that work normally, market forces correct excessive price levels. But where companies face no competition and exploit the lack of alternatives, it is our role as European competition authorities to intervene.

Today's Aspen decision is a concrete contribution to making essential medicines more affordable and accessible. Competition enforcement is necessary to keep companies in check and put an end to anti-competitive behaviours that deprive patients and European health systems from affordable prices for essential medicines. Our enforcement therefore complements the Commission's Pharmaceutical Strategy. It also contributes to the Commission's actions in its Europe's Beating Cancer Plan. Today's decision will immediately lead to specific cancer medicines being available at prices that are no longer excessive and ensure security of supply for a significant period. And our guidance is also clear: excessive prices for medicines will not be tolerated.

Along with the recent decision to fine Teva and Cephalon for delaying generic entry, today's Aspen decision shows our commitment to ensure EU competition rules are fully respected also in the pharmaceutical sector.

Thank you.