Collective action on excessive pricing of pharmaceuticals moves on to merits phase

On July 17, 2024, the Amsterdam District Court ruled that the representative organization Stichting Farma Ter Verantwoording (Foundation Pharma Held Responsible, “FTV”) is admissible in its collective action (under the WAMCA, i.e., the Dutch Resolution of Mass Damages in Collective Actions Act) against pharmaceutical giant AbbVie. The case now moves on to the merits phase, in which the court will assess whether Abbvie abused its dominant position and violated human rights by charging excessive prices for its Humira medicine.

The case is particularly notable for the court’s pragmatic approach to the WAMCA’s procedural requirements, which significantly expedited the proceedings.[1]

Case background

FTV filed a collective action lawsuit against Abbvie’s US parent company and its Dutch and German subsidiaries, alleging that they abused a dominant market position and violated human rights between 2004 and 2018 by charging excessively high prices for the drug Humira during its patent protection period. Humira is used to treat conditions such as rheumatoid arthritis and psoriasis. The excessive prices would have harmed the Dutch healthcare system by diverting funds away from other medicine and treatments. FTV does not claim damages, but only seeks a declaratory ruling that AbbVie acted unlawfully against the entire Dutch healthcare insured population.

Admissibility of FTV as a representative organization

The WAMCA sets strict admissibility criteria for representative organizations but also grants the court discretion to apply a more lenient regime. Under this lighter regime the representative organization is exempt from certain requirements, such as having:

• a supervisory body;
• sufficient financial capacity to carry the costs of a case and independence from the funding source;
• a publicly accessible internet webpage;
• sufficient experience and expertise in the initiation and conduct of the litigation; and
• a management report and financial statements prepared and published.

The remaining criteria that are still applicable in the lighter regime are, inter alia, the requirements that:

• the interests that the organization represents are sufficiently safeguarded;
• the organization is sufficiently representative;
• the board members of the representative organization do not pursue profit motives through the organization;
• there is a sufficient connection with the Dutch legal sphere; and
• the representative organization made sufficient efforts for an out-of-court settlement.   

The court can apply the lighter regime for claims with an ideological aim (excluding monetary damages claims) and a very limited financial interest, or if the nature of the claim or characteristics of the represented individuals justify applying this lighter regime (Article 3:305a (6) Dutch Civil Code). In the present case, the court finds that the nature of the claim warrants the application of the lighter regime. The primary reason seems to be that FTV’s claim is non-monetary.

The court subsequently considered Abbvie’s arguments that FTV would be inadmissible under the lighter regime. Abbvie argued for example that FTV failed to show that healthcare-insured Dutch citizens accept FTV as their representative.  The court rejects this argument, considering that in the context of a public interest action, it is practically impossible for a representative organization to name its supporters individually, let alone to demonstrate that it represents a sufficient number of people to establish its representativeness (which is a factor in actions with a monetary aim). Instead, according to the court, a better criterion for representativeness in non-monetary actions is whether the representative organization can be seen as an adequate spokesperson for those represented. The court found this to be the case, as FTV had previously filed a complaint to the Dutch competition authority in relation to excessive pricing of another medicine, and was involved in activities such as discussions with lawmakers, healthcare professionals and insurers, publishing articles, organizing webinars, media appearances, and giving guest lectures at universities. Additionally, its chairman had been invited to a parliamentary hearing  in relation to expensive medications. The court ruled that FTV therefore complied with the representativeness criterion.  

Admissibility of FTV’s claim

After ruling that FTV is admissible as a representative organization, the court moves on to assess the admissibility of the claims.

First, the court considers that FTV’s collective action is more effective and efficient than individual claims. The action pertains to the effects of Humira’s pricing on all Dutch healthcare insured, and the questions of fact and law are largely common to this group “i.e. can be answered with a certain level of abstraction regardless of individual circumstances”. The court considers that FTV furthermore represents a sufficiently large group to justify collective action.

Second, the court rejects AbbVie’s ‘motion to dismiss’. Abbvie argued that the claims would be manifestly unfounded for being political, and lacking specific elements of a competition law breach. As to the alleged political nature, the court refers to the Urgenda case in which the Dutch Supreme Court ruled that civil courts are not banned from the realm of political decision-making, but merely prohibited from ordering the State to bring specific legislation with a predefined content into existence. That is not the case with FTV’s claim. The court also rejects the argument that the competition law infringement was insufficiently substantiated, and considers that the merits phase is the appropriate time and place to fully address and debate all elements of the (alleged) infringement. 

Procedural interest in the claims

AbbVie also argued that FTV lacks a legitimate interest in its claims, claiming that FTV’s real motive is to create a legal precedent to pursue other cases, relating to other medicines and other companies. FTV maintained that it has a valid interest in the claim, by representing individuals who were adversely affected by AbbVie’s pricing practices. The court found that FTV’s and its supporter’s interest in the claims cannot be ruled out at this stage, and ordered the issue to be fully addressed in the substantive phase.

Conclusion and next steps

The court concludes that FTV is admissible under the ‘light regime’ of the WAMCA, as well as a procedural interest in the claim, and that the claim itself is admissible.

Concerning next steps, the court decides to skip various elements prescribed by the WAMCA:

• the court does not appoint an exclusive representative, as there are no other representative organizations bringing a similar claim, so that the appointment of the exclusive representative would not serve any purpose and only lead to delay (cf. article 1018(d) Dutch Code of Civil Procedure);
• the court does not (re-)define the claim and the group that FTV represents (cf. article 1018(e) (2) Dutch Code of Civil Procedure);
• the court decides that no option needs to be provided for opting-in or out of the claim considering the nature of the claim (cf. article 1018(f) Dutch Code of Civil Procedure);
• the court does not consider it necessary to send the parties to the negotiation table, as prescribed by article 1018(g) Dutch Code of Civil Procedure;
• the court does not give the plaintiff the opportunity to supplement the grounds of its claim (cf. article 1018(g) Dutch Code of Civil Procedure).

Instead, the court immediately refers the case to a statement of defense on the merits to be submitted by Abbvie.

Implications of the judgment

With the introduction of the WAMCA, the admissibility criteria for collective claims have become more stringent, also for non-monetary claims (e.g. public interest or ideological claims). This case shows that the Dutch courts are willing to apply a more lenient regime to such non-monetary claims.  

In this non-monetary case, the court takes a pragmatic approach to interpreting the WAMCA rules. On some points, the court is prepared to depart from the literal text of the law, in particular in relation to  provisions that seem to have been created for monetary claims. Thus, the case provides relevant insights into how courts may handle non-monetary claims under the WAMCA regime. At the same time, the case is unlikely to have any bearing on the court’s approach to monetary claims.

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The attorneys at Lindenbaum have been litigation counsel in in several of the leading collective actions in the Netherlands and Europe. Do not hesitate to contact one of our experts.

[1]              The judgment also contains an interesting assessment of the court’s international jurisdiction in this case, which merits a separate discussion going beyond the scope of this article.