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Aspen, Roche, Pfizer investigated for excessive cancer drug pricing

CompCom identifies pharmaceuticals as ‘priority sector’ for its enforcement efforts.

The Competition Commission (CompCom) is investigating Roche Holdings, pharmaceutical giant Pfizer and Aspen Pharmacare for alleged excessive cancer drug pricing.

Roche is being investigated for the pricing of breast cancer medicine, Pfizer for lung cancer medication and Aspen for suspected abuse of dominance in charging excessive prices for cancer medicines.

In a statement released on Tuesday, the CompCom said it 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”.

CompCom commissioner Tembinkosi Bonakele announced the investigations at a media briefing on Tuesday. He said: “This is a priority investigation for us. We have to treat this with the urgency and sensitivity it deserves – there are still many patients in need of these drugs.”

Bonakele said the abuse of patents would be looked into, adding that a perpetual monopoly aided by patents was unlawful. The CompCom is to get evidence from patients in its investigation.

Aspen

Information suggests Aspen’s has engaged or is engaging in excessive pricing in Leukeran – a chemotherapy medication treating chronic lymphocytic leukemia, Hodgkin lymphoma, and non-Hodgkin lymphoma; Alkeran, used to treat bone marrow cancer and epithelial ovarian cancer; and Myleran, used in pediatrics and adults.

Aspen appears to be a dominant firm in the provision of these drugs.

In a Sens released on Tuesday afternoon, Aspen says it has noted the CompCom announcement and is committed to “full and constructive” engagement with the commission in its investigation.

“It is reiterated that pharmaceutical prices in South Africa are approved by the Department of Health in terms of the Single Exit Price regulatory framework, which establishes a universal fixed price for each pharmaceutical product. Aspen has not increased pricing of its products outside of this regulatory framework and has clearly demonstrated its commitment to providing quality medicines affordably over many years. The supply of the oncology products in question is no exception,” the Sens reads.

At 15:20 on Tuesday, Aspen’s shares were flat in Johannesburg at R275.04.

The Public Investment Corporation (PIC) is Aspen Pharmacare’s biggest shareholder, with a 10.87% stake.

Deon Botha, PIC head of corporate affairs, comments: “We understand that this matter is a subject of investigation by the Competition Commission. It is, however, necessary to mention that we prefer that investee companies abide by the laws and regulations of countries in which they operate and that they act responsibly in their dealings.”

Aspen under fire in the EU

In May, Reuters reported here that the European Commission was investigating whether Aspen Pharmacare charged excessive prices – up to several hundred percent – for five key cancer drugs and has withdrawn the drugs in some EU countries or threatened to do so in others.

“Companies should be rewarded for producing these pharmaceuticals to ensure that they keep making them into the future. But when the price of a drug suddenly goes up by several hundred percent, this is something the commission may look at,” European Competition Commissioner Margrethe Vestager was quoted as saying.

“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,” said the CompCom.

“Moreover, Aspen appears to be either the only supplier or at least a dominant supplier of these products in both the South African and European markets. Given that Aspen’s products are listed as generic products, it is of concern that none of the markets have observed significant entry of other generic products by competing pharmaceutical companies.”

Aspen said the EU probe concerned several of its European subsidiaries, adding that it would work constructively with the commission.

Pfizer 

US-based Pfizer is the only provider of its lung cancer treatment medication known as Xalkori Crizotinib in South Africa.

Based on information available to the CompCom, it suspects Pfizer “has and continues to engage in excessive pricing conduct” in the drug’s provision, contravening the Competition Act.

Its information suggests that lung cancer treatment is unaffordable in South Africa and medical aid schemes refuse to pay for the treatment.

Information available to the ComCom suggests Xalkori Crizotinib costs approximately R152 000.00 for 250 mg when bought through an agent, Equity. It seems there was a price reduction to R72 000 per month for 250 mg subsequently – conduct is suggestive of abusive behaviour in the drug’s supply.

Pfizer denies that it supplies the lung cancer product at the alleged price of R152 000. “We await the opportunity to be contacted by the commission to clarify the pricing for this product. We respect the process initiated by the commission and Pfizer shall fully cooperate with the authorities in their investigation.”

Roche

Roche told Moneyweb is has not yet received a formal notification by the Competition Commission in South Africa. “In the case where we receive a formal notification, we will be cooperating with the authorities, and will provide all required information and will respond to the allegation.”

The CompCom states it has reason to believe Roche and its US-based biotechnology company, 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.”

The commission says information in its possession confirms that breast cancer treatment is unaffordable in South Africa and many medical aid schemes refuse to pay the treatment based on cost. “As a result of exorbitant prices, most breast cancer patients in both the private and public sectors are unable to get treatment.”

As such, it has grounds to suspect that Roche and Genentech 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”.

It adds that information available to it shows that Roche and Genentech charge 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 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.”

According to GroundUp here, in February the Treatment Action Campaign organised a protest against Roche over the pricing of Trastuzumab. It handed over a memorandum to Roche demanding the price and that it stop cease litigation against competitors making generics.

Roche’s Aadila Fakier signed and accepted the memorandum, saying the concerns were noted and Roche would engage with relevant stakeholders on this.

Roche stated that it had been in negotiations with the Department of Health over the past year “to improve equitable access to Trastuzumab in the public sector. We have offered the Department of Health a significantly reduced and cost-effective treatment option….A final agreement has however not yet been concluded”.

Comment has been sought from Pfizer but wasn’t received before time of publishing.

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Oh for heaven sake. Aspen pulls out the lame “single exit”price excuse. Anybody who has done an introductory economics course knows how fixed price systems get abused. I have had many conversations with pharma management who laughingly explain how it is even easier to game the system because government has decided to interfere in the market. JUST BECAUSE YOU BAMBOOZLED THE DEPARTMENT OF HEALTH TO ACCEPT AN INFLATED PRICE DOES NOT MEAN YOU ARE NOT GAMING THE SYSTEM. I KNOW THIS IS A DISGUSTING EXCUSE AND ASPEN MANAGEMENT ALSO KNOW HOW SHAMEFULL THIS EXCUSE IS. ARE THE GUYS ANY BETTER THAN THE GUPTAS? WHAT DO THESE DRUGS COST TO MAKE? THATS ALL I WANT TO KNOW.

Something doesn’t add up with those shareholdings in Aspen.

PIC 49.56%
Stephen Saad Investment Trust 38.93%
Northern Trust Global Investments with 18.912%
Total = 107.40%

Huh?

Hi DFur. Thanks for pointing that out – it was a very bad typo!

YES AT LAST AN INVESTIGATION FOR WHAT ITS WORTH. MY WIFE HAS CANCER AND QUITE FAR YET APPROX. 2 MONTHS AGO SHE WENT TO THE PHARMACY TO COLLECT HER TABLETS FOR THE FIRST TIME THIS YEAR. THE ANSWER WAS THAT THE MEDICAL AID HAS DECLINED BECAUSE THE FUND IS DEPLETED. SO YES THE PRICES ARE SO HIGH THAT WE SUFFER AND THEY AND THE FUND WALK AWAY WITH THE BOODLE.

Janvrot – you have no idea what you are talking about. Are you basing your “insights” on word of mouth conspiracy theories you’ve had around the braai with a few brandy-and-cokes behind you? All prescription med prices since 2004 are set by the Department of Health and are all simultaneously increased in line with inflation and currency shifts. You seem as ignorant and sensationalist as the Competition Commission itself. Just also remember – when pharma companies, who invest millions in these drugs so that they can bring them to market, stop doing so because they are beaten into submission by social justice warriors libtards like yourself or where they cannot sustain distribution due to cost factors, where will you find your medication?

I have no idea of what I am talking about??? Aspen does not spend a cent on r&d. They would never bet a billion to find a cure. They buy a dossier for $300k and then pay reps R700k a month to peddle the stuff. They are just a giant team of reps. With regard to pricing. you are right. Besides the inflation increases granted by the DOH, pharma companies cant ask for an increase in prices, they can only lower prices. So now the games begin. If you cant increase prices and can only decrease prices what initial price should you begin with? Before you tell me what I do and dont know tell me what these drugs cost to make? Tell me how much aspen paid gsk fo the rights to these drugs? I also suggest you look into aspen’s history wrt ARV’s. Why were SA prices significantly higher than the prices the clinto foundation were paying? South Africans were paying way more for ARV;s compared to prices in other African countries. Why?

Aspen buy tail end cancer drugs from gsk on the cheap. And then what do they do. Straight out of the Valeant and Mylan (epipen) playbook they do this.
Following the deal, the price of the leukaemia treatment busulfan increased from £5.20 to an eye-watering £69.02 a pack in England a Wales – an increase of 1,200 percent.

Chlorambucil, also used to treat leukaemia, jumped from £8.36 to £42.87 – a 400% price hike.

Margeret is going to take these guys to the cleaners. What case could Aspen possibly argue?

Margaret Vestager, the EU’s competition commissioner, said “hen the price of a drug suddenly goes up by several hundred per cent, this is something the commission will look at.”

Drugs for children. And you thought the Gupta’s were bad. White monopoly capital at its very very best

Price increases for cancer drugs up to 1500%: the ICA imposes a 5 million Euro fine on the multinational Aspen

The ICA imposed a fine of more than 5 million Euros on the multinational pharmaceutical company Aspen for infringing art. 102, letter a) of the Treaty on the Functioning of the European Union. In fact, the company had fixed unfair prices with increases up to 1500% for life-saving and irreplaceable drugs in the treatment of oncohematological patients, especially children and elderly people.

After purchasing the antitumor drug package from GlaxoSmithKline – whose patent expired decades ago – Aspen started negotiations with the Italian Medicines Agency (Agenzia Italiana del Farmaco – AIFA) with the sole aim to obtain a high increase in prices, even in the absence of any necessary economic justifications. The negotiation strategy adopted by Aspen was so aggressive as to reach the credible threat of interrupting the direct supply of the drugs to the Italian market. The mentioned products are based on the following active ingredients: chlorambucil, melphalan, mercaptopurine and tioguanine, in which only Aspen is present with the so-called Cosmos drugs, that is the medical products Leukeran (chlorambucil), Alkeran – both injectable and in tablets – (melphalan), Purinethol (mercaptopurine) and Tioguanine (tioguanine).

Through this negotiation strategy, Aspen obtained an extremely high increase in prices, ranging between 300% and 1500% of the initial prices.

The ICA’s investigation on the unfair practice was carried out through a two-phase test that measured the disproportion between prices and costs.

The unreasonableness of the mentioned disproportion resulted indicative of unfair prices also in the light of specific context and behavioural factors, such as: the inter-temporal comparison of prices, the absence of economic justifications for the increase, the absence of any extra-economic benefits for patients, the nature of Comos’s drugs, the characteristics of the group Aspen and the damage caused to the National Health System (Sistema Sanitario Nazionale – SSN).

Rome, 14 October 2016

here we go again.

“pharmaceutical prices in South Africa are approved by the South African Department of Health in

terms of the Single Exit Price (“SEP”) regulatory framework which establishes a universal fixed price

for each pharmaceutical product”

Blah blah blah. Now the Italian courts found that the prices charged are disproportionate to the cost of producing the product. THIS IS THE ISSUE, YET, YOU REFUSE TO ADDRESS IT. Come on all you have to say is it cost x to make and you sell it for y and look the profit is very reasonable. So I ask again, what are the costs in proportion to the prices charged and is this reasonable? I know your answer, oh it costs very little to make, but, then you have to add in the cost of the rep and this is where we will try to bamboozle the issue.

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