Norway’s mandatory pharmaceutical liability insurance - in breach of EEA competition law?

Antitrust Update


The statutory obligation is to insure that drug liability can only be met by one insurance option nowadays, excluding other possible players from this insurance niche. Under the statutory insurance scheme, membership in the Drug Liability Association is compulsory. In practice, this places the Drug Liability Association’s solely owned company, the Norwegian Drug Liability Insurance AS (Ltd.), in a unique position. Small adjustments in current practice would open competition.

In 2003, the EFTA Surveillance Authority (ESA) found that the Norwegian Drug Liability Insurance Pool was limiting competition and accordingly was in violation of the European Economic Area (EEA) Agreement article 53 (TFEU 101). The Insurance Pool was abruptly abolished and replaced with an interim solution through the creation of the limited liability company Norwegian Drug Liability Insurance.

The intention was that the Drug Liability Association, which is responsible for and oversees compliance with the current statutory obligation, would enter into agreements with other market players, not just the Norwegian Drug Liability Insurance. This has not happened.

Twelve years later, the Drug Liability Association has now chosen to only provide coverage through agreements with the mentioned player. Has the Drug Liability Association neglected to invite other players to tender, or does this indicate a lack of interest in this niche product?

Because the system has not changed since the establishment of the interim solution, the only Norwegian pharmaceutical manufacturers’ insurance option is still what the Drug Liability Association offers.

Norway’s neighbors, Sweden and Denmark, have chosen different solutions. In Sweden, drug liability damages are covered by an insurance plan based on a voluntary agreement between the pharmaceutical manufacturers. In Denmark, private hospitals, private clinics and practicing doctors select insurance for specific treatments and examinations themselves. The experience with these solutions shows that there might be potential players and markets for other types of insurance solutions. Is the time ripe for alternative solutions in Norway? 

Small adjustments could increase transparency and exclude the possibility of the Drug Liability Association exploiting its position. One solution to create greater competition is to give members the opportunity to choose freely among several insurance offers which the Drug Liability Association has approved and/or collected. This may generate bids/interest from other Norwegian or international insurance companies. The solution only requires a change in current practice; no legislative changes would be required. 

A more radical solution would be to provide drug manufacturers the right to choose and enter into an insurance agreement directly with the insurers. This approach requires a statutory amendment which abolishes the requirement of an obligatory membership in the Drug Liability Association.

Both solutions would open market access, increase competition and create a system that is in line with Norway’s EEA Competition law obligations. Changes in the scheme would provide both Norwegian and international insurance companies an incentive to offer niche products in the drug liability insurance market in Norway for the benefit of Norwegian pharmaceutical manufacturers.

This is a short version of a longer Norwegian article published in Scandinavian Insurance Quarterly issue 2/2015. The article has been translated and edited by Katrine Lillerud and Line Voldstad.