JSE-listed pharmaceutical company Aspen will have to pay a $5.2m fine plus interest imposed by the Italian Competition Authority related to the company’s portfolio of oncology products distributed in Italy, writes Business Report. Aspen is one of three companies – the others are Pfizer and Roche – being probed by the South African Competition Commission for alleged price-fixing.
The newspaper quotes Aspen as saying that it had been informed that the Italian court had dismissed its appeal against the Italian Competition Authority ruling.
Aspen said it was waiting for the release of the full reasons for this judgment and the Italian court’s assessment of the underlying facts, including that the price for most of the relevant Aspen drugs in Italy had not been increased for between 40 and 60 years, and that a generic version of one of the Aspen drugs in question had recently been approved in Italy, with a list price of more than double that of the Aspen drug on an equivalent dose basis.
“Aspen will engage its advisers and consider the matter further against receipt of those reasons, including Aspen’s automatic right to lodge a further appeal to the Council of State Appeal Court,” it said.
The report says the South African Competition Commission has launched an investigation into three major pharmaceutical companies for allegedly fixing the prices of cancer medication. The investigation followed suspected collusion by Aspen, Pfizer and Roche over the prices they were charging for cancer drugs.
Commenting on the commission’s announcement, Aspen said in the report that pharmaceutical prices in South Africa were approved by the Department of Health in terms of the Single Exit Price (SEP) Regulatory Framework, which established a universal fixed price for each pharmaceutical product.
Aspen said it had not increased the pricing of its products outside of this regulatory framework and had clearly demonstrated its commitment to providing affordable quality medicines over many years, including the supply of the oncology products.
The company said that to date it had not had any engagement with the commission on these issues and welcomed the opportunity to meet and clarify certain key issues on the products listed by the commission in its announcement.
The issues included that these products were all post-patent and had been for some time now; there were no obvious barriers preventing generic entry for these products; and despite the lack of generic competition on these products, Aspen had never increased the price for the products in South Africa beyond the allowable SEP increases.
It added that invariably the lack of generic entry to a country was either attributable to the sub-economical pricing of the branded products and/or an unattractive market size. “Aspen hopes to demonstrate, through its active engagement with the commission and other affected stakeholders, its ongoing commitment to supplying the South African market with quality affordable medicines for which it is renowned.
“While Aspen acknowledges the vital nature of the four oncology products listed in the commission’s announcement, these products have a collective turnover of about R3m in the South African private market,” the company said in the report.
The commission made several mistakes in its statement launching the investigation, including getting the name of Pfizer’s drug wrong. According to a Business Day report, the commission did not note that all drug prices are approved and signed off by the medicines pricing committee within the Department of Health.
The commission also said it had information that gives “rise to reasonable suspicion that Pfizer has and continues to engage in excessive pricing conduct in provision of crizotinib”. Pfizer confirmed that crizotinib is not registered in South Africa.
An unregistered drug cannot be sold in the country and will not have a price, the report said. The commission complained about its R152‚000 price saying it was in possession of information that this treatment was “unaffordable”. Pfizer denied this price.
Wits Medical School oncology professor Paul Ruff explained that a handful of patients accessed this drug using a special Section 21 permit to buy it overseas and import it, because it is not available here. Medicines only get a set price after they are registered in the country‚ he said‚ so crizotinib has no local price or supplier.
The report says Aspen confirmed that its drugs under investigation have increased on average by 6.25% a year since 2009, when Aspen bought the drug portfolio from GSK. The commission said Aspen’s drug prices may be “excessive”.
The drug used for leukaemia‚ Leukeran‚ costs between R2‚800 and R4‚800 a month per patient. Myleran‚ used for a blood cancer‚ costs an average of R2‚086 a month but the dose and price will drop after a few months if the cancer goes into remission‚ said Aspen’s spokesperson Stavros Nicolaou.
The report says the commission also took issue with Roche’s cancer drug which costs R500‚000 in the private sector for a year’s course. The commission said people couldn’t access the drugs and charged Roche with “exclusionary conduct”. But this drug is to be provided to state patients at one of the lowest prices in the world within months‚ two sources close to the Roche and Department of Health negotiations said.
Roche said recently it believed a deal with the department on supplying this drug to state patients was “about to be finalised” saying negotiations were “advanced”. Two sources also confirmed that the commission didn’t even call the Department of Health to get its views on the matter or check the commission’s facts. All three pharmaceutical companies learned of the investigations through the media statement.
The commission also charged Roche with “price discrimination” because it has a state price and a private-sector price for cancer drug Herceptin. However‚ the Medicines and Related Substances Control Act allows the prices for medicines for state patients and private patients to differ and‚ in fact‚ a high private price is used to subsidise very low state prices for nearly all medicines in the country‚ two industry sources confirmed.
The report says the commission did not respond to requests for clarification.
Competition Commission spokesperson Sipho Ngwema said the commission knew the Pfizer drug was not sold here but it would investigate Pfizer nonetheless. Ngwema said: “Whilst we accept that the drug is not registered in SA, however, the conduct has an effect in the country as there are patients who use the drug here. These patients are subjected to very high pricing. Further, our investigation will in any event probe why it is not registered here.”
Asked about the fact drug prices and yearly increases are set by government he is quoted in the report as saying: “Even though there is single exit price (set by government), this neither means prices cannot be excessive nor is the process beyond scrutiny. There are drugs that have been investigated in other country for excessive prices that Aspen supplies to SA.”
He also said the Competition Commission had “a sufficient basis to start an investigation”. “Part of our probe will look into patent laws and their effect on entry (of generic products).”
Breast cancer patients say, meanwhile, that the cost of some medication is so steep many with the illness simply cannot afford to treat it and this leaves them without the drugs and facing death sentences. News24 reports that patients with HER2 – a specific type of breast cancer – have to cough up roughly R500,000 for drug treatment alone, while patients who rely on public healthcare may never be diagnosed.
HER2+ patients, said in the report that due to the alleged price fixing of the Herceptin drug, specifically used in the treatment of HER2, it was effectively unaffordable in the private sector and basically unavailable in the public sector.
Herceptin is also commercially known as Trastuzumab.
Claudette Moore, a public hospital patient who only found out she was HER2+ because she could afford a private blood test, said she feels like her days are numbered because she is unable to afford the Herceptin drug. “It’s heart breaking, it feels like you are worth nothing. It feels like there are things in this country worth more than you are – why does the state not care about me? What makes other people better?” she asked.
Moore, now in remission, was diagnosed with HER2 in 2015. The report says that as a public health patient, Charlotte Maxeke Johannesburg Academic Hospital, formerly known as the Johannesburg General Hospital, refused to supply her with Herceptin and she was treated with a heavy mix of chemo called the “red devil” because of its colouring.
“Who’s to say that if I had access to Herceptin that my cancer could’ve been gone, if I was treated with the correct thing? In my case the cancer can come back any time. It is always in the back of my mind, there’s a voice saying: ‘Listen here, you’re living on borrowed time’,” she said.
The report say Moore is a member of the Cancer Alliance, which advocates for a change in patent laws to make life-saving drugs such as Herceptin affordable to patients. The association blames companies such as Roche, which has a patent on Herceptin production in South Africa until 2020, for pushing up drug prices in the pursuit of corporate profit.
Roche Holdings AG is one of the three companies under investigation by the Competition Commission.
Cancer Alliance coordinator Salomé Meyer said in the report that currently Kimberley Hospital is the only hospital in South Africa dispensing the Herceptin drug. “My question is, when has it not been cost effective to save a person’s life? To save a person’s life is regarded as important enough when it’s HIV, however if the same person gets HER2+ no one cares,” she said.
Meanwhile, the head of Charlotte Maxeke Hospital’s therapy committee, professor Guy Richards, confirmed that tests for HER2+ were not conducted because Herceptin is unavailable. Richards, who is also the academic head for critical care at the University of Witwatersrand, however said that Herceptin is not primarily used as a HER2+ cure. “It is not going to save people, it (only) results in a prolongation in a small group of patients,” Richards is quoted in the report as saying. He said the state has decided to roll out Herceptin to a small number of patients in trial centres starting in July.
The report says in written answers, Roche said they have received no formal notification from the Competition Commission about its investigation. “In case we receive a formal notification, we will be cooperating fully with the authorities, will provide all required information and will respond to the allegations,” spokesperson Aadila Fakier said.
Fakier did not respond to questions specifically asking whether price fixing occurred for the Herceptin drug.
The Board of Healthcare Funders of Southern Africa has welcomed the inquiry. “The BHF is of the view that since their introduction, biologics used in cancer treatment have been significantly overpriced. We also believe there should be a widening of the scope of the investigation into the pricing of biologics used in the treatment of all diseases, not just cancer – biologics are also used for treatment of systemic lupus and rheumatoid arthritis for example. The reality is that the incidence of diseases requiring biologic treatment interventions is increasing, so it is essential that the issues around cost of and access to these life-saving medicines are resolved,” explains Dr Rajesh Patel, head: benefit & risk at the BHF.
“It is noteworthy that when you compare the pricing of these drugs from different manufacturers, they are all within a very narrow band, which suggests that even if there is no collusion, at the very least there is no active competition between the different pharmaceutical companies. While single exit pricing determines what pharmacies pay for medicine from suppliers or drug manufacturers, this pricing is set by the pharmaceutical company which is free determine what it charges for its medicines.
“BHF believes that South Africa is in urgent need of a scientific approach to determine how a medicine is priced, and when a medicine is priced excessively and thus unaffordable. Furthermore, the Medicines Act allows the set price in the private sector to be different to the state price for medicines as it is acceptable practice that the standardised private price of all drugs subsidises the low state price for the majority of poor or indigent South Africans. However, we have seen the subsidised cost of certain biologics to vary by more than 500% when compared with private sector costs – these price differentials are simply too enormous to overlook and demand deeper investigation,” concludes Patel.