Competition issues in the distribution of pharmaceuticals

Roundtable

Date: 28 February 2014
Location: OECD, Paris

About

Pharmaceuticals are very special products, because of the peculiar characteristics of their demand and supply. Hence their distribution from the manufacturers till the final consumer is heavily regulated to ensure that drugs are accessible, affordable, and safely consumed. Despite this need for regulatory constraints, competition can and should play a role in ensuring that the market for the distribution of pharmaceuticals works well for consumers, so that these can benefit from higher quality, greater choice and variety, more innovation and lower prices.

In February 2014, the second day of the OECD Global Forum on Competition was dedicated to competition issues in the distribution of pharmaceuticals. This full-day session provided an overview of how competition works in this market, to identify the main problems that can arise at different levels of the distribution chain and to better understand the interplay between competition and regulation.

Participants were encouraged to discuss competition cases, and the way regulations (or other forms of government intervention) interact with competition throughout the supply chain, and any advocacy efforts arising from such analysis.

Seven experts lived up the discussion and delegations had the opportunity to further discuss the topic during breakout sessions in the afternoon.

This page contains all session information and materials including contributions from participating delegations and speakers.

Key takeways from the discussion

Policy-makers and enforcers need to understand the distinctive economic features of the pharmaceuticals sector thoroughly to be able to intervene in this sector.
Better enforcement of regulation and of competition law, more consumer information, and greater control over the incentives provided by manufacturers to doctors could improve outcomes in the distribution of pharmaceuticals in less developed countries.
Mechanisms used to regulate drug prices can have varying effects on competition. Competition authorities are well placed to help guide the choice of the most appropriate ones.
Drug price regulation and limited patent length are not sufficient to ensure vigorous competition between originators and generics. Competition, public cost-efficiency and private affordability can be further fostered by measures to promote generics.
Forward integration by manufacturers and backward integration by pharmacy chains are changing the traditional structure of the pharmaceutical supply chain and are raising new competition issues.
The extensive historic regulation of the retail pharmacy sector in many countries should be assessed considering its impact on consumer welfare.

The key findings of the discusion can be accessed here and a detailed summary here.