4. What assessment has the Counsel General made of the legal implications for Wales of the EU Commission’s 2008 inquiry into anti-competitive practices by the pharmaceutical industry? OAQ(5)0035(CG)

Well, every year, the national health services across the UK lose out on millions of pounds due to some pharmaceutical companies breaching European and domestic competition law. We work very closely and effectively with the Department of Health, and the other devolved administrations, who share our interest in these issues, to recover our losses, and where there are grounds for legal action.

Thank you, Counsel General. It’s clear from the scale of recent finds that the Welsh Government is at significant cost risk from some pharmaceutical companies, which appear to be working together to fix prices. Does the Counsel General believe that this risk will increase as a result of our exit from the European Union, and what steps has the Welsh Government taken in order to protect the Welsh NHS post Brexit?

Well, you raise a very important issue. And in answering that question as fully as I can, I think I need to be very prudent about the legal sensitivities and about the duties of confidentiality owed to the court and to other third parties, which the Member will appreciate, and which I must respect. So, I suppose, in answering your question, I’m not going to make any specific reference to any particular cases that have been brought or settled, or identify any individual companies, or ongoing legal actions, or potential actions, of which there are a number. Nevertheless, you raise an issue that is of significant importance and matters of clear public interest, where there are clear issues to be resolved as part of the Brexit negotiations.

In 2008, as your question points out, the European Commission launched an inquiry to investigate possible anti-competitive conditions in the pharmaceutical sector. The commission published its final report in July 2008. The report presents the commission’s detailed findings, and proposes ways to improve patients’ rapid access to medicines. And the main findings of the report, which are a matter of public record, conclude that it takes too long for generic drugs to reach the market, fewer innovative medicines are reaching the market, and that certain drug company practices contribute to this situation.

It is apparent from decisions of the commission, and the Competition and Markets Authority, the CMA, that certain companies within the pharmaceutical sector engage in anti-competitive behaviour, which has the potential to cause financial losses to the Welsh Ministers, to the national health service in Wales and to the wider NHS in the UK, and, indeed, across Europe. Welsh Government works with the departments of health in England, Scotland and Northern Ireland to investigate such cases. Where anti-competitive behaviour causes losses to the Welsh Ministers and the NHS in Wales, appropriate legal action is taken to recover such losses. I can confirm that Welsh Ministers have been successful in a number of cases by achieving settlements.

The pan-European nature of this anti-competitive action by parts of the pharmaceutical industry can result in enormous losses. As a matter of public record, the level of some of the fines reflects this. For example, action taken by the European Commission has resulted in fines, in one case of €427 million for breaching EU anti-trust rules, and in other cases abuse of dominant market position; €180 million in another case; in other cases, €10 million and €5.5 million. Certainly, enormous and significant amounts. The CMA has parallel powers to those of the commission in tackling anti-competitive behaviour within the UK, and can impose its own sanctions. In one case, it imposed a fine of £45 million. The financial impact of this behaviour is potentially enormous, and if not tackled leads to unnecessary cost to the NHS of tens and hundreds of millions of pounds, of which the NHS bears a share.

So, it is an area where Welsh Government is very active, in conjunction with our counterparts, across the UK, in the Department of Health, and the devolved Governments. Of particular concern will be the need for a post-Brexit strategy, to ensure that we are not disadvantaged in tackling anti-competitive activity. Notwithstanding the domestic powers of the CMA, at the moment it is unclear whether the ability to rely on the European Commission’s investigations and decisions, as we have done in the past, will continue, or how they will continue. To my mind, there is a clear common interest in Wales, the rest of the UK and the European authorities in continuing to tackle these complex transnational issues together.