Pharmaceutical companies face severer antitrust compliance challenges - Commentary on the "Price Conduct Guidelines on Operators of Drugs prone to Shortages and APIs"

Authored by Michael Gu (michaelgu@anjielaw.com) and Sihui Sun(sunsihui@anjielaw.com) at AnJie Law Firm

Four months after seeking comments, the National Development and Reform Commission ("NDRC") released “Price Conduct Guidelines on Operators of Drugs prone to Shortages and APIs ” (“Guidelines”) on 16 November 2017. This is the first price-related anti-monopoly guidelines for a specific industry since the Anti-Monopoly Law was implemented. The Guidelines provide risk assessment warning and compliance guidance for pricing monopolistic behaviours involving both drugs prone to shortages and active pharmaceutical ingredients (“APIs”). For the first time, the Guidelines clarify that enforcement agencies use the "Prohibition plus Exemption" principle to identify pricing monopolistic agreements and refine the consideration of certain abusive activities (e.g. unfair pricing and refusal to deal). In addition, the Guidelines remove controversial provisions such as exclusive dealing that is included in the draft Guidelines. We recommend that the relevant pharmaceutical enterprises should conduct the anti-monopoly risk audit by reference to the Guidelines and adopt more strict compliance measures to identify and prevent the relevant legal risks.

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