Message from the President.

Anna Judson reports on BVA's recent activities around the Competition and Markets Authority's market investigation.

Measuring competition in primary care-Evidence from Sweden.

INTRODUCTION: In many tax-based healthcare systems, policymakers have introduced reforms that promote provider competition with the intention of improving the quality and efficiency. Healthcare competition is usually defined spatially, with local markets often being identified as a circle around each provider. We argue that existing local market definitions can be improved to better capture actual local markets. For pro-competition reforms to potentially lead to the gains envisioned by policymakers, a crucial condition is the actual emergence of competitive markets. However, limited research has been conducted on competition in primary care markets, despite primary care constituting a vital part of a healthcare system. AIM: The study aims to contribute to the debate on how to define local markets geographically and to examine provider competition in Swedish primary care. METHODS: A cross-sectional study was conducted using data on all individuals and all primary care providers in Sweden. Local markets were defined as: fixed radius (1 km and 3 km); variable radius; and variable shape-our new local market definition that allows markets to vary in both size and shape. Competition was measured using the Herfindahl-Hirschman index and a count of the number of competitors within the local market. RESULTS: Fixed radius markets fail to capture variation within and across geographical areas. The variable radius and variable shape markets are similar but do not always identify the same competitors or level of competition. Furthermore, competition levels vary significantly in Swedish primary care. Many providers operate in monopoly markets, whereas others face high competition. CONCLUSIONS: While the variable shape approach has the potential to better capture actual markets and more accurately identify competitors, further analyses are needed. Moreover, Swedish policymakers are advised to decide whether to still pursue competition and if so, take measures to improve local market conditions in monopolies.

Measuring and Understanding Market Exclusivity Length for New Prescription Drugs in France, Australia, and the USA.

BACKGROUND: Originator drug manufacturers use several strategies to delay generic competition in the USA, but it remains unclear whether this results in longer market exclusivity compared to other countries. OBJECTIVES: We sought to understand how drug market exclusivity lengths vary between the USA and two comparable countries. METHODS: We focused on drugs approved within 2 years of each other in the USA, France, and Australia from 1995 to 2005, and we compared the lengths of exclusivity from marketing approval through first generic competition or June 2023 using Kaplan-Meier analyses. RESULTS: Among 165 drugs in common between the USA and France, the median length of exclusivity was slightly longer in France (15.0 years, interquartile range [IQR]: 13.0-19.6) than the USA (14.5 years, IQR: 11.7-17.6). Among 100 drugs in common between the USA and Australia, the median length of exclusivity was longer in Australia (16.3 years, IQR: 13.9-22.4) than in the USA (14.4 years, IQR: 12.0-17.1). CONCLUSIONS: Market exclusivity lengths in the USA are not longer than in France and Australia. Potential reasons include the larger US market and incentives that offer transient high generic drug prices in the USA for manufacturers that successfully challenge originator market exclusivity.

Charting the Etanercept Journey: Tracing Cost Dynamics in Poland's Off-Patent Market from Reference Drug Rivalry to Biosimilar Monopoly.

OBJECTIVES: To evaluate the pricing of etanercept (ETN) reference and biosimilar drugs in a changing competitive to monopolized market. METHODS: We conducted a comprehensive, retrospective analysis of ETN market competition, specifically changes in tender price based on shifts in market monopoly, including the effects on cost evolution, in the off-patent market in Poland. We included a total of 473 tenders for ETN purchase in dedicated biologic drug reimbursement programs, covering both pre-filled syringes and automatic injectors. This study covers the timeframe from November 2017 to December 2023, throughout which we evaluated a unique setting of ETN market re-monopolization from the perspective of payer, hospital and patient benefits resulting from changing cost calculations. RESULTS: Between 2017 and 2022, Erelzi was recorded as having the largest total tender volume (59%), with a mean price [per ETN daily defined dose (DDD)] of €7.28, followed by Enbrel (31%, €8.34) and Benepali (10%, €9.45), respectively. Over the last 6 months of waning market competition, the mean price for winning bids was estimated at €5.69. After market re-monopolization by an ETN biosimilar, the mean price of winning bids increased to €8.09, and continued to increase (€9.71) in the last 6 months of available follow-up. In contrast to the competitive era, no significant relationship between tender volume and winning price was recorded after re-monopolization. In the most recent tenders, mean ETN prices increased up to €15.82, nearly tripling the lowest prices of the competitive market period. In the early re-monopolization market, mean annual treatment cost per patient is estimated at over €3800, which exceeds therapy costs in the prior competitive market years, and is expected to increase to over €6200 based on the most recent tenders. On a healthcare system level, this corresponds to over €3.42 million excess costs due to market monopoly. Higher ETN prices resulted in downstream failure of regulatory incentives to promote affordable biologics. Due to higher pricing, hospitals lost over an estimated €2.52 million, with possible risk of treatment restrictions. For the same reason, the public payer achieved comparable savings, allowing for partial coverage of higher reimbursement expenses. CONCLUSIONS: This nation-level scenario of market re-monopolization by a biosimilar drug confirms net loss and excess costs for the healthcare payer, as can be expected from economic theory. The upwards drug repricing and restriction of treatment availability occurs much more rapidly than the decrement in a period of market competition.

Sustaining competition for biosimilars on the pharmacy benefit: Use it or lose it.

Congress passed the Biologic Price Competition and Innovation Act of 2009, specifically to offer market competition as a counterweight to the rising costs of biologic medicines. As of April 15, 2024, 49 biosimilars have been approved by the US Food and Drug Administration in 15 biologic categories. Biosimilar competition has been undeniably successful: Through 2022, biosimilars have saved the US health system $23.6 billion, without significant care disruption or reduced quality. Through 2023, adalimumab biosimilar competition has added an additional $6.5 billion to this total, primarily through greater rebates from the reference manufacturer. Despite launching at discounts as great as 85%, adalimumab biosimilars have not been given preferred formulary positioning in the vast majority of cases and have thus gained only 3% of market share through 2023, largely because of payers' and pharmacy benefit managers' preference for rebates over discounts. This situation may negatively influence future biosimilar development, posing a threat to a biosimilar pipeline that represents hundreds of billions in savings over the next 10 years.

Impact of RMB internationalization on China's competitiveness in financial services trade based on the VAR model: Evidence from China-US.

An increase in a currency internationalization levels can positively impact its credibility in international economic activities, and expand the effective demand and optimize the supply structure for the country's financial service trade. In this way, a state can improve its financial service trade competitiveness in the international market. This study builds a vector autoregressive model based on time-series data of China-US financial services trade from 2010 to 2021, analyzes the impact of different quantitative indicators of RMB internationalization on this trade from the impulse response results, and validates the conclusions using various inspection methods. The results show that the increase in RMB internationalization helps to narrow the China-US financial services trade balance, but with a significant lag. And this effect is heterogeneous in different dimensions, demonstrated by the fact that the development of overseas RMB securities business is more important for the level of RMB internationalization to narrow the China-US financial services trade balance. Finally, among the specific measures to improve its financial services trade, China should focus on developing the international competitiveness of the traditional RMB deposit and loan financial sector, while the competition in the overseas market for high value-added financial businesses must also not be neglected. Furthermore, China needs to implement more targeted RMB internationalization development policies at different levels in the future to provide high-quality financial services to the rest of the world and aid in the economic recovery of the world in the "post-pandemic" era.

An evolutionary game-theoretic analysis of the "multi-agent co-governance" system of unfair competition on internet platforms.

The increasingly prominent issue of unfair competition on Internet platforms (IPUC) severely restricts the healthy and sustainable development of the platform economy. Based on the IPUC "multi-agent co-governance" scenario, this paper introduces stochastic disturbances and continuous strategy set to improve the classical binary deterministic evolutionary game system. The results show that after considering stochastic disturbances, the positive state corresponding to the equilibrium point (1,1) is no longer stable, and the required parameter conditions are more stringent. The IPUC "multi-agent co-governance" system under stochastic disturbances exhibits specific vulnerability. In the continuous strategy set evolutionary game system, government departments and Internet platforms can flexibly make optimal decisions based on maximizing expected returns, and strategy selection has better elasticity. Regardless of the evolutionary game scenario, maintaining the participation level of NGOs and the public above a certain threshold while increasing the penalty intensity is conducive to the evolution of the game system toward the positive state. The analysis process and conclusions provide insights and guidance for the governments to design the IPUC regulatory system and frameworks.

The scientific standing of nations and its relationship with economic competitiveness.

In the current knowledge-based economy, the abilities of the national research system are a key driver of the country's competitiveness and socio-economic development. This paper compares the scientific standing of the OECD countries and eight other relevant economies. We use a bibliometric indicator of research performance, applied first at the individual level. This approach avoids the distortions of the aggregate-level analyses extant in literature and practice, which overlook the different publication intensities across research fields. We find a strong correlation between research performance and the economic competitiveness of nations and a moderate but significant correlation between research performance and the propensity to spend on research.

Preconditions for efficiency and affordability in competitive healthcare markets: Are they fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland? Ten years later.

From the mid-1990s several countries have introduced elements of the model of regulated competition in healthcare. In 2012 we assessed the extent to which in five countries ten important preconditions for achieving efficiency and affordability in competitive healthcare markets were fulfilled. In this paper we assess to what extent the fulfilment of these preconditions has changed ten years later. In 2022, as in 2012, in none of the five countries all preconditions are completely fulfilled. In the period 2012-2022 on balance there have been some improvements in the fulfillment of the preconditions, although to a different extent in the five countries. The only preconditions that were improved in most countries were 'consumer information and transparency' and 'cross-subsidies without incentives for risk selection'. On balance the Netherlands and Switzerland made most progress in the number of better fulfilled preconditions. For Belgium these preconditions no longer seem relevant because the idea of regulated competition has been completely abandoned. In Germany, Israel and Switzerland, the preconditions 'effective competition policy' and 'contestability of the markets' are not sufficiently fulfilled in 2022, just as in 2012. In Germany and Switzerland this also holds for the precondition 'freedom to contract and integrate'. Overall, the progress towards realizing the preconditions has been limited.

Federal Trade Commission Actions on Prescription Drugs, 2000-2022.

Importance: The Federal Trade Commission's (FTC) oversight role in the pharmaceutical market is critical to the health of patients and the health care system. This study characterized the FTC's policy on the pharmaceutical market in recent decades, identifying the types of actions it has favored, barriers it has faced, and authorities that remain untested. Objective: To review FTC legal actions in the pharmaceutical market from 2000-2022. Evidence Review: Legal actions were determined through manual review of search results from the FTC's online Legal Library as well as a 2023 FTC report on pharmaceutical actions. The alleged misconduct, type of legal action taken, timing, and outcome were collected from press releases, complaints, orders, and other legal documents. Findings: From 2000-2022, the FTC challenged 62 mergers, brought 22 enforcement actions against allegedly unlawful business practices, and made 1 rule related to pharmaceuticals. Alleged misconduct in enforcement actions involved anticompetitive settlements in patent litigation (n = 11), unilateral actions by brand manufacturers to delay generic competition (n = 6), noncompete agreements (n = 4), and monopolization (n = 3), with 10 outcomes involving monetary payment, totaling $1.6 billion. Of the 62 mergers the FTC challenged, 61 were allowed to continue, 58 after divesting certain drugs to third-party competitors. The FTC's reliance on drug divestitures decreased from 18 drugs per year from 2000-2017 to 4.3 per year from 2017-2023. Conclusions and Relevance: The FTC brought about 1 enforcement action and 3 merger actions per year against pharmaceutical manufacturers from 2000-2022, pursuing a small fraction of the estimated misconduct and consolidation in the pharmaceutical marketplace. Although the FTC faces substantial legal and practical limitations, important tools remain untested, including a rule defining "unfair methods of competition," that may allow it to more effectively prevent repetitive patterns of anticompetitive behavior.

Generic Drugs and the Struggle to Compete: The Role of Skinny Labels.

PURPOSE: The generic drug industry currently faces multiple, serious issues that threaten the US drug supply. So-called "skinny labels" are one of the few tools authorized by Congress to expedite entry into the market by generic competitors when the first patent for a brand's drug compound (only) expires. This article reviews the law on this expedited marketing pathway for generic competitors, as well as limitations on its use. METHODS: We examined the literature on patent protection of brand drugs, including the timelines for production of generic competitors. We also examined the law concerning skinny labels, including a recent decision of the US Federal Circuit Court that clearly articulates the guidelines concerning entry into the generic market, including labeling, marketing, and promotion. FINDINGS: Skinny labels that follow the regulations set forth in the Hatch-Waxman Act, including the necessary carve-out procedure for "methods of use" still protected by 1 or more active patents, do not infringe a brand drug's label. Furthermore, the skinny label does not induce or contribute to infringement merely because its label contains US Food and Drug Administration-required safety profile data-even when the data cross-reference superiority studies on still-patent protected methods of use elsewhere in the label. IMPLICATIONS: Generic drugs have become essential to the broad, general availability of clinical therapeutic agents. The Hatch-Waxman Act was intended to facilitate entry of generic competitors into the marketplace, and the skinny label is an important tool to accomplish that end. As long as the generic manufacturer follows the essential skinny-label rules, specifically including marketing the compound without promoting or advertising those methods of use still protected by ongoing patents, the law will not find induced or contributory infringement.

CMA launches market investigation.

As the Competition and Markets Authority (CMA) presses ahead with a formal 'market investigation' into the UK's veterinary services market for household pets, we will continue to advocate for and support our members, as well as the wider profession.

Competition of multiplatform firms: Implications for the Internet of Things.

The Internet of Things (IoT) technology trend is transforming business and society. This creates a need to understand strategic behavior in the consumer IoT, where firms tend to offer multiple platform devices, and new generations of devices are introduced frequently. We propose a novel analytical model that formalizes the concept of a multiplatform firm that offers a system of platforms, such as a smartphone, and a new platform device, such as a smartwatch, and orchestrates a multiplatform ecosystem. The analysis shows how a platform design decision, like offering a new standalone device, affects consumer choices and market outcomes. We identify two classes of new devices that matter, and show when a new platform device may disrupt the smartphone market. Moreover, we characterize conditions under which it is profitable for a vendor to make its new platform device look and feel more like its smartphone. Overall, we provide insights into how multiplatform firms differ from platform firms. We identify future research opportunities on the economics of consumer IoT and multiplatform ecosystems.

Ensuring the veterinary view cuts through.

We submitted a joint response to the Competition and Markets Authority's (CMA) consultation on its proposed market investigation into the UK veterinary services market for pets in April, following the initial review, which outlined a number of concerns.

Competition and regional Phillips curve: Evidence from China.

The product market competition affects the non-neutrality of monetary policy. This paper quantitatively assesses its impact on the slope of the Phillips curve through the channels of nominal and real rigidity. We build a New Keynesian model using the Kimball aggregator and the Calvo staggered pricing scheme. We show that a more competitive market environment has opposite effects on the slope of the Phillips curve by increasing the real rigidity and lowering the nominal rigidity. We then estimated the model using regional data of China. The Bayesian estimation shows that the response of inflation-output trade-off is larger in the region with a high degree of competition. Counterfactual experiments demonstrate that nominal rigidity has a dominant role and accounts for the majority of the difference in the Phillips curve, while the contribution of real rigidity is relatively minor. Our results highlight the key role of nominal rigidity in determining the inflation-output dynamics.

Research on the "multi-agent co-governance" system of unfair competition on internet platforms: Based on the perspective of evolutionary game.

Unfair competition on internet platforms (UCIP) has become a critical issue restricting the platform economy's healthy development. This paper applies evolutionary game theory to study how to utilize multiple subjects' synergy to supervise UCIP effectively. First, the "multi-agent co-governance" mode of UCIP is constructed based on the traditional "unitary supervision" mode. Second, the government and internet platform evolutionary game models are built under two supervision modes. Finally, MATLAB is used to simulate and analyze the evolutionary stage and parameter sensitivity. In addition, we match the model's evolutionary stage with China's supervisory process. The results show that (1) the Chinese government's supervision of UCIP is in the transitional stage from "campaign-style" to "normalization." (2) Moderate government supervision intensity is essential to guide the game system to evolve toward the ideal state. If the supervision intensity is too high, it will inhibit the enthusiasm for supervision. If the supervision intensity is too low, it cannot form an effective deterrent to the internet platforms. (3) When the participation of industry associations and platform users is low, it can only slow down the evolutionary speed of the game system's convergence to the unfavorable state. Nevertheless, it cannot reverse the evolutionary result. (4) Maintaining the participation level of industry associations and platform users above a specific threshold value while increasing punishment intensity will promote the transition of government supervision from the "campaign-style" to the "normalization" stage. This paper provides ideas and references for the Chinese government to design a supervision mechanism for UCIP.