The Competition Commission has initiated an investigation against a number of pharmaceutical companies based on concerns raised by Civil society organisations such as Advocates for Breast Cancer, the Cancer Alliance, the Cancer Association of South Africa and SECTION27. The pharmaceutical companies that are currently being investigated include:
Roche Holding AG (Roche) – supplier of lifesaving breast cancer medicine in South Africa.
Pfiizer – supplier of lung cancer medicine
Aspen – provider of life saving medicine for cancer
The commission has reason to believe that Roche and its USA-based biotechnology company, Genentech Inc. (Genentech) have and continue to engage in excessive pricing, price discrimination and/or exclusionary conduct in the provision of breast cancer medicine in South Africa.
Breast cancer is the leading form of cancer affecting women in South Africa. Medication known as Trastuzumab is recommended as an essential medicine by the World Health Organisation and is primarily used to treat breast cancer and some types of stomach cancer.
In South Africa, only Roche’s branded versions of Trastuzumab are available and are sold under the names Herceptin and Herclon. Genentech provides exclusive marketing rights to Roche for Trastuzumab in South Africa.
Information in possession of the Commission confirms that breast cancer treatment is unaffordable in South Africa and many medical aid schemes refuse to pay the treatment based on cost. For example, a 12-month course of Herceptin in the private sector costs over R500 000, or more, if a higher dosage is required. As a result of exorbitant prices, most breast cancer patients in both the private and public sectors are unable to get treatment.
On this basis, the Commission has reasonable grounds to suspect that Roche and Genentech (both referred to as ‘the Respondent’ in this matter) may be charging excessive prices for breast cancer medicines, including Herceptin and Herclon, to the detriment of consumers and in contravention of the Competition Act.
Information in possession of the Commission gives rise to a reasonable suspicion that the respondent may be engaging in exclusionary conduct in order to prolong its hold on breast cancer drugs. In particular, the Respondent may be using the ‘ever-greening’ strategy to delay and/or prevent entry of generic alternative breast cancer drugs. Ever-greening is a process whereby a first generation patent, that is about to expire, undergoes a minor change in an attempt to be granted second generation patent protection.
The respondent may also be engaging in exclusionary conduct by using the ‘patent thicket’ strategy to delay and/or prevent entry of generic alternative breast cancer drugs.
This strategy prevents the development of alternate versions of the original product by restricting the processes whereby a drug is produced. It also limits the number of forms of the active ingredient that generic companies can make, thereby eliminating possible substitutable products.
Information available to the commission shows that the respondent charges its customers different prices for breast cancer medicines. For example, in the private sector, a 12-month course of Herceptin costs approximately R500 000, or more, if higher dosage is required. The respondent offers substantially low prices for Herclon in the public sector.
The Medicines Control Council does not register a particular medicine for use in one sector (e.g. private) and not in the other (e.g. public). The choice of restricting sales to a particular sector is a commercial choice by the patent holder, in this instance the respondent. This conduct may amount to price discrimination in contravention of section 9(1) of the Competition Act.
Pfizer Inc, has also been under the scrutiny of the Competition Commission for suspected excessive pricing of lung cancer medication in South Africa. Pfizer, an American pharmaceutical firm with its headquarters in New York, develops and produces medicines and vaccines for a wide range of medical disciplines, including immunology, oncology, cardiology, diabetology/endocrinology and neurology. Of relevance to the Commission’s investigation is the company’s lung cancer treatment medication known as xalkori crizotinib. Pfizer is the only provider of xalkori crizotinib in the country.
The Commission is in possession of information that gives rise to a reasonable suspicion that Pfizer has and continues to engage in excessive pricing conduct in the provision of xalkori crizotinib, in contravention of the Competition Act.
The Commission is in possession of information that suggests that lung cancer treatment is unaffordable in South Africa and medical aid schemes refuse to pay for the treatment. The information available to the Commission is that xalkori crizotinib cost approximately R152 000.00 for 250 mg when bought through an agent, Equity (Pty) Ltd. Subsequent information suggests that there was a price reduction to R72 000.00 per month for 250 mg. This conduct is suggestive of abusive behaviour in respect of the supply of xalkori crizotinib in South Africa.
Aspen is another pharmaceutical company that is receiving the attention of the Competition Commission for its conduct in the market. Commission has initiated an investigation against Aspen Pharmacare Holdings Ltd (Aspen) for suspected abuse of dominance by charging excessive prices in the provision of lifesaving cancer medicines in South Africa.
The Commission is in possession of information that gives rise to a reasonable suspicion that Aspen has and continues to engage in the excessive pricing in the provision of certain cancer medicines in South Africa, namely
Leukeran (active ingredient chlorambucil) is a chemotherapy medication used to treat chronic lymphocytic leukemia, Hodgkin lymphoma, and non-Hodgkin lymphoma;
Alkeran (active ingredient melphalan) is typically used to treat multiple myeloma (bone marrow cancer) and epithelial ovarian cancer; and
Myleran (active ingredient busulfan) is used in pediatrics and adults as a conditioning agent prior to bone marrow transplantation, especially in chronic myelogenous leukemia (CML) and other leukemias, lymphomas, and myeloproliferative disorders.
The commission is of the view that Aspen appears to be a dominant firm in the provision of the Leukeran, Alkeran and Myleran drugs in South Africa.
In terms of Myleran, Aspen appears to be the only supplier of a generic version of busulfan in tablet form. No other products containing the same active ingredient appears to have been registered by the Medicines Control Council (MCC).
Aspen’s Leukeran brand is listed as a generic and there does not seem to be a listing for an originator product in the country. As with Leukeran, Aspen’s Alkeran brand (tablet and injection) is the only product listed locally which contains melphalan. The drug is offered in both tablet (generic) and injection (originator) dosage form. Aspen is currently under investigation by competition authorities in various European countries for alleged excessive pricing on, among other products, Leukeran, Alkeran and Myleran. The European Commission has also launched an investigation in the European Union.
Given that Aspen supplies similar products (i.e. Alkeran, Leukeran and Myleran) in South Africa, the Commission has reasonable grounds to suspect that Aspen may be engaging in similar conduct locally
The Competition Commission has identified the healthcare sector, and in particular, pharmaceuticals, as a priority sector for its enforcement efforts due to the likely negative impact that anti-competitive conduct in that sector would have on consumers in general and specifically the poor and vulnerable.
The Competition Commission has revealed this information as part of its series of investigations into organisations that are involved in drugs for cancer business.
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