There is a history of competition law being used to drive HIV medicine prices lower in South Africa. Now, two cases involving cancer medicines might well nail down what qualifies as “excessive pricing” in South African law – a legal development that could have far reaching implications for medicine prices in the country.
The Competition Commission played a pivotal role in South Africa’s historic fight for access to HIV medicines, a decision it made in 2003 helping to open the door for affordable generic HIV medicines. Twenty years later, another Competition Commission decision probably contributed to a pharmaceutical company agreeing to forgo its patents on a crucial TB drug.
Now, two other cases, focused on the pricing of two cancer medicines – lenalidomide and trastuzumab – are quietly making their way through the Commission’s processes, and could have far-reaching implications for how medicines are priced in South Africa, writes Catherine Tomlinson for Spotlight.
The key to generic ARVs
To understand why the current cases are so important, some background is needed.
In the early 2000s, lifesaving HIV medicines remained inaccessible to all but the wealthiest people in South Africa and much of the world. It has been estimated that more than 300 000 people died prematurely from HIV-related causes in this country between 2000 and 2005, due to the deadly combination of medicine unaffordability and government-led Aids denialism.
As part of their efforts to secure access to life-saving HIV treatment, the Treatment Action Campaign and the Aids Law Project (now SECTION27) challenged the prices charged for HIV medicines, lodging a complaint with the Competition Commission against GlaxoSmithKline (GSK) and Boehringer Ingelheim (BI). They argued that the companies were engaging in excessive pricing and anti-competitive behaviour.
The case was one of the first major tests of South Africa’s revamped, post-apartheid competition legislation. The law in question: the 1998 Competition Act, set up the Competition Commission, Competition Tribunal and Competition Appeal Court.
The idea was that matters could be taken to the Commission, and if it deemed there to be a case worth looking at, sent on to the Tribunal.
In this instance, the Commission found evidence supporting TAC and SECTION27’s complaint and referred the matter to the Tribunal for hearings and a decision.
But, since GSK and BI then decided to settle the case, it was never actually heard before the Tribunal. As part of the settlement, GSK and BI licensed several companies to supply generic ARVs to sub-Saharan Africa. Consequently, the price of HIV medicines fell to a fraction of what it was previously, helping to facilitate the massive public sector rollout of HIV medicines thereafter.
In a somewhat similar case, the Competition Commission announced in September 2023 that it had initiated an investigation into excessive pricing and exclusionary practices by Johnson & Johnson (J&J) for the TB medicine bedaquiline.
Two weeks later, J&J announced in a surprise move it would not enforce its patents on bedaquiline in 134 low- and middle-income countries, meaning generic bedaquiline could now be manufactured and used in these countries.
No firm precedent
In both the 2003 and 2023 cases, matters were resolved in the period between the Commission referring it to the Tribunal and the Tribunal actually considering the matter. In neither case did hearings take place at the Tribunal, nor did the Tribunal make any findings.
In fact, to date, there have never been public hearings or a decision by the Competition Tribunal regarding what constitutes excessive medicine pricing in South Africa.
This is the critical thing that may change with the two cancer medicine cases now making their way through the Commission’s processes.
Unlike with the 2003 and 2023 cases, there are no obvious things that the companies involved in the two matters could do to settle and thus avoid hearings before the Tribunal and eventual findings.
That is because both cases relate to alleged harms caused by excessive pricing during time periods that have already ended.
The trastuzumab case
In February 2022, the Competition Commission referred a case of alleged excessive pricing of trastuzumab – a breast cancer medicine – manufactured by Roche to the Competition Tribunal. The Commission stated at the time: “The Commission’s investigation found that the excessive pricing conduct took place between January 2011 and November 2020 in the South African private healthcare sector, and in the public healthcare sector during … 9 November 2015 to July 2020.
“The Commission has asked the Tribunal to impose a maximum penalty against Roche, for its alleged harmful and life-denying pricing conduct.”
Almost three years have passed since the matter was referred to the Tribunal, yet no hearings have taken place. “The Tribunal processes are slow due to the congested diary,” Siyabulela Makunga, spokesperson for the Competition Commission, told Spotlight.
“In the case of the Roche referral, the delays have been compounded by Roche’s jurisdictional challenge to investigate and refer a matter to the Tribunal. There was also an intervenor in the proceedings on the matter, amounting to further delays,” he added.
Then last week the Commission announced that the Cancer Alliance had been admitted as an intervenor in the case and can therefore provide evidence for consideration, including on how the alleged excessive price harmed patients. The Cancer Alliance is legally represented in the matter by SECTION27.
Regarding the allegations of excessive pricing, Esnath Muzenda, a communication officer with Roche, told Spotlight: “Roche rejects the allegations of the Competition Commission in the strongest terms and will contest all charges. All of our medicines have been priced to ensure the broadest access possible in South Africa. At Roche, our primary contribution to society is to develop medicines and diagnostics that significantly improve people’s lives.
“We are contesting this matter to seek an expedient and satisfactory resolution for the benefit of the health system, patients, and the ability of multinationals to bring innovation to South Africa. We will not have any further comment …while it is ongoing.”
The lenalidomide case
Another case before the Competition Commission stems from a complaint accusing pharmaceutical company Celgene of overpricing the multiple myeloma medicine lenalidomide. The complaint was lodged by the Cancer Alliance in January 2023.
Like the trastuzamab case, the lenalidomide case is seeking remedies for excessive pricing over a period that has already ended: April 2016 to December 2020.
When lodging the complaint, the Cancer Alliance submitted a detailed memorandum to the Commission outlining why the price charged for lenalidomide between April 2016 and December 2020 was excessive and how this harmed patients. An updated version of that memorandum can be viewed here.
The price of lenalidomide in South Africa rose and fell by more than 1 000% during the period of alleged abuse identified by the Cancer Alliance, Spotlight previously reported.
The dramatic rise in the price seen for lenalidomide is relatively unheard of in South Africa, where price increases for registered medicines are strictly regulated by law. The increase occurred partly because Celgene’s more expensive originator product was only registered and made available in this country after cheaper generic products were already in use here – this usually happens the other way around.
Before its April 2016 registration in South Africa, multiple myeloma patients and their healthcare providers were importing generic lenalidomide from India through Section 21 authorisations. This mechanism facilitated by the South African Health Products Regulatory Authority (SAHPRA) allows for the importation and use of an unregistered medicine when there is a demonstrable need for the unregistered product.
Section 21 authorisations may be used to gain access to a medicine whose authorisation by SAHPRA is pending, or to obtain an equivalent version of an unregistered medicine when there is a shortage of the registered product.
After the registration of Celgene’s lenalidomide, SAHPRA halted Section 21 authorisations for importation of generics – reasoning that the authorisations were no longer needed because the medicine was now registered here.
But, when Celgene launched its lenalidomide product in South Africa, it priced the medicine at more than R70 000 per month – far higher than the cost of the generics being imported from India for around R5 000 per month. Overnight, many patients saw their access to this key lifesaving medicine cut off.
To regain access to generic lenalidomide, the Cancer Alliance worked with multiple myeloma patients, clinical haematologist Dr Mike du Toit, and legal firm Webber Wentzel to challenge SAHPRA’s decision to halt Section 21 authorisations.
They successfully argued that SAHPRA must continue to grant the authorisations for generic lenalidomide for patients who’d previously accessed generics through this pathway because Celgene’s price was prohibitive for many. New patients, however, would need to pay the far higher price charged by Celgene for its registered product.
In the private sector, Celgene’s price for lenalidomide exceeded what most medical schemes were willing to pay, leaving patients to cover substantial costs, ration or forgo treatment, or seek other avenues to bring in unauthorised generic products.
In the public sector, where most South Africans seek care, lenalidomide was simply unavailable due to its high price.
Access to generic lenalidomide
Celgene had sought at least 32 patents on lenalidomide in South Africa which could block access to generics until 2036, warned the Cancer Alliance in 2019, begging the government to use available legal mechanisms to enable generic access.
Finally, with significant attention focused on lenalidomide pricing here, Celgene did not assert its secondary patents to block the entry of generic lenalidomide – which then became available in 2020, and prices dropped rapidly.
The medicine was included on the National Essential Medicines List, and is now available in the public health sector, with the government paying R976 for a month’s worth of the drug.
Building the case
Although access to lenalidomide is now resolved, the Cancer Alliance contends in its memorandum to the Competition Commission that Celgene should still be held accountable for excessively high prices between April 2016 and December 2020, which they argue was not only unaffordable for most South Africans but also harmed patients.
In its memorandum, the Cancer Alliance used the affordability-based standard from the Commission’s 2003 HIV medicines case and other health economic methods developed since then to assess excessive pricing.
The affordability-based standard was developed by James Love, an expert on the economics of access to medicines and director of Washington-based non-profit Knowledge Ecology International.
He proposed the following standard for determining if the price of a patented medicine is excessive: “For essential intellectual property goods in South Africa, a price that bears a reasonable relationship to the economic value of a good must at least be a price that most people in need of the good are willing and able to pay. A price that is too high for most people to afford is presumed to be excessive.”
In its memorandum, the Cancer Alliance argued that prosecuting companies charging excessive prices falls within the Commission’s Constitutional mandate to achieve the progressive realisation of the right to health within the state’s available resources.
Paul Malherbe from the Cancer Alliance told Spotlight that the organisation hopes for several outcomes from the case: setting a precedent for what constitutes excess medicine pricing, establishing deterrents against excessive pricing by companies, and providing a blueprint that can be used to pursue other excessive medicine pricing complaints.
“Excessive pricing is an ongoing issue because new medicines keep coming out. We can’t afford to deal with them case by case. We have to have some set of laws, incentives, agreements, that resolve this issue going forward. This case is just trying to help create the circumstances under which that resolution takes place.”
Bristol Myers Squibb, which acquired Celgene in 2019, did not respond to a request for comment on the allegations of excessive pricing of lenalidomide in South Africa.
What’s next?
Almost two years have passed since the Cancer Alliance first lodged its complaint with the Competition Commission and the matter has not been referred to the Tribunal.
“The Commission’s investigation is advanced, and we anticipate issuing a decision before the end of this calendar year,” said Makunga.
If the case is referred to the Tribunal, it may still be years before public hearings take place and a decision is made, as seen with the trastuzumab case. When asked about the timeline should the lenalidomide case be referred to the Tribunal, Makunga said: “It is difficult to make a prediction as circumstances are different in each matter.”
On how long it has taken, Malherbe said: “There are people who could have been witnesses at trial who have died [since Cancer Alliance lodged the complaint]. They can’t do that now, and it’s painful to see these delays, knowing it harms the ability of patients to see justice done.”
See more from MedicalBrief archives:
Cost of key cancer drug drops after generics victory
Competition Commission welcomes Tribunal’s excessive pricing decision
Use of generics rises to a new high in SA’s private sector
J&J probed for high TB drug prices and patent law ‘abuse’
South Africans slowly changing to generics