Therapeutic substitutability under scrutiny: defining relevant markets in EU pharmaceutical law

Market definition is fundamental to EU competition law. It serves as a preliminary step in assessing dominance, anti-competitive conduct, and merger control. With respect to the pharmaceutical sector, traditional approaches to defining the relevant market face specific hurdles. Therapeutic substitutability is seen as a guiding principle which often creates a facade over the complicated circumstances prevalent in the pharmaceutical sector. The pharmaceutical sector is strikingly unique: there is market exclusivity due to patent protection, price disconnect due to prescribing decisions being mediated by physicians, extremely high costs of innovation, and regulatory approvals dependent on the efficacy and safety of clinical trials. This difficulty is amplified in the definition of the relevant market for the product, especially with the rise of biologics and biosimilars, which resist categorisation as interchangeable products despite exhibiting similar therapeutic purposes. This paper critically examines how EU institutions have approached market definition in pharmaceutical cases. Reliance on the Anatomical Therapeutic Chemical (ATC) classification, application of the SSNIP test, and the interpretive tensions reflected in cases such as AstraZeneca and GlaxoSmithKline have been analysed. It argues that conceptually appealing therapeutic substitutability often produces inconsistent outcomes when applied to markets as unique as the pharmaceutical sector. By situating pharmaceutical market definition within the broader debates on competition policy and public health, the paper highlights the need for a more specific framework that takes into consideration the various complexities of biologics and biosimilars, regulation of the pricing strategies, and accessibility to the patient. The paper eventually suggests that EU competition law must evolve towards a hybrid approach where economic theory is balanced along with sector-specific realities. This shall ensure both competitive integrity and the accessibility of medicines.