0
Competition issues in the
market for anti-malaria
drugs in Burma
UK Office of Fair Trading
Global Forum on Competition

Co...
Contents
● Background
● Theories of harm
● Mitigation
● Observations

2
Background
● Resistance developing to anti-malaria
monotherapy treatment (“AMT”) in Burma, which
could potentially spread ...
Background (2)
● Usual approach taken elsewhere would be to offer
subsidised product to any wholesale distributor that
wan...
Competition issue
● Does giving a single firm (AA) such an advantage
create risks for competition?
OFT provided technical ...
Theories of harm
● Primary theory is that subsidy allows AA to build
up a dominant position that it can exploit through
hi...
Theories of harm (2)
● …but, theory of harm will only apply if the
project is successful:

- Consumers cannot afford unsub...
Mitigation
● Identified three potential sources of mitigation
related to:

- Quality seal
- Extending subsidy to BB
- IP r...
Quality seal
● PSI advertises a quality seal, rather than the
AA brand:

- Removes brand effect
- Removes barriers to entr...
Extend subsidy
● Extend subsidy to include BB

- Removes brand effect, as there will be two
competing brands in the market...
Extend subsidy (2)
● Benefits?

- Perception of fairness
- Mixed evidence regarding whether BB
provides additional geograp...
IP rights
● PSI retains all IP rights to AA ACT brand
● Post-subsidy PSI licenses IP to AA with price
control

12
Observations
● Relatively limited competition risk in future if
scheme successful.

- Decisions to be made by PSI regardin...
Competition issues in the
market for anti-malaria
drugs in Burma
Office of Fair Trading
Global Forum on Competition

Compe...
Upcoming SlideShare
Loading in...5
×

Competition and Pharmaceuticals - UK Office of Fair Trading - 2014 OECD Global Forum on Competition

459

Published on

This presentation by the UK Office of Fair Trading was made at the 2014 Global Forum on Competition (27-28 February) at the session on competition issues in the distribution of pharmaceuticals. Find out more at http://www.oecd.org/competition/globalforum

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
459
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
24
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "Competition and Pharmaceuticals - UK Office of Fair Trading - 2014 OECD Global Forum on Competition"

  1. 1. Competition issues in the market for anti-malaria drugs in Burma UK Office of Fair Trading Global Forum on Competition Competition issues in the distribution of pharmaceuticals (Friday 28 February 2014) 1
  2. 2. Contents ● Background ● Theories of harm ● Mitigation ● Observations 2
  3. 3. Background ● Resistance developing to anti-malaria monotherapy treatment (“AMT”) in Burma, which could potentially spread around the world ● PSI (a charity), backed with funding by UK Department for International Development (DfID) and others, subsidising a switch to combination treatment (“ACT”) that is less susceptible to resistance 3
  4. 4. Background (2) ● Usual approach taken elsewhere would be to offer subsidised product to any wholesale distributor that wants it. Political considerations meant this not possible in Burma. ● Non-permanent subsidy offered to a single wholesale distributor, AA, with retail price control and significant advertising. ● Success of scheme depends on 1. Growth of public sector, and 2. reduction of global unsubsidised price of ACT 4
  5. 5. Competition issue ● Does giving a single firm (AA) such an advantage create risks for competition? OFT provided technical assistance to PSI in May 2013 under DfID’s Investment Facility for Utilising UK Specialist Expertise (iFUSE) scheme, which funds UK civil service expertise abroad. 5
  6. 6. Theories of harm ● Primary theory is that subsidy allows AA to build up a dominant position that it can exploit through higher prices post-price control when the subsidy has ended: - Brand value: evidence that brand important to consumers - Foreclosure: main competitor, BB, could be forced out of the market without access to subsidy 6
  7. 7. Theories of harm (2) ● …but, theory of harm will only apply if the project is successful: - Consumers cannot afford unsubsidised ACT even at current wholesale cost, meaning no ACT will be sold irrespective of monopoly mark-up - AA would only have an incentive to exploit a monopoly position if unsubsidised wholesale cost reduces to feasible levels 7
  8. 8. Mitigation ● Identified three potential sources of mitigation related to: - Quality seal - Extending subsidy to BB - IP rights 8
  9. 9. Quality seal ● PSI advertises a quality seal, rather than the AA brand: - Removes brand effect - Removes barriers to entry (even if BB exit they can easily re-enter with quality seal) ● Risks - Difficult to assess as advertising just starting 9
  10. 10. Extend subsidy ● Extend subsidy to include BB - Removes brand effect, as there will be two competing brands in the market - Removes foreclosure, as BB will remain in market ● Costs: - Advertising costs for new brand 10
  11. 11. Extend subsidy (2) ● Benefits? - Perception of fairness - Mixed evidence regarding whether BB provides additional geographic scope ● Risks - Political objective not met 11
  12. 12. IP rights ● PSI retains all IP rights to AA ACT brand ● Post-subsidy PSI licenses IP to AA with price control 12
  13. 13. Observations ● Relatively limited competition risk in future if scheme successful. - Decisions to be made by PSI regarding appropriate mitigation. ● Common themes in healthcare: - Interaction of competition objectives with other objectives, including health and political. - Reliance on private sector in developing countries. 13
  14. 14. Competition issues in the market for anti-malaria drugs in Burma Office of Fair Trading Global Forum on Competition Competition issues in the distribution of pharmaceuticals (Friday 28 February 2014) 14
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×