In July, the South African Competition Commission launched an investigation into Aspen, Pfizer and Roche in relation to alleged excessive pricing for certain cancer medicines. What is particularly concerning about the Competition Commission’s investigation is the fact that this involves products that are still patent-protected for some time to come. This is a worrying development given the risk that scrutiny of originator pricing prior to patent expiry can seriously undermine incentives to engage in costly R&D programs. The South African investigation follows the EU’s probe into Aspen earlier this year and previous UK and Italian penalty decisions for excessive pricing by Aspen.
These cases are unlikely to denote a new enforcement trend, at least at EU level. Authorities have been cautious in their statements on excessive pricing, and the cases themselves seem confined to extreme facts. EU Competition Commissioner Vestager underlined the need for caution: “… when we do take action against excessive prices, we need to make sure we’re not taking away the rewards that encourage businesses to innovate.” That the bar for intervention in relation to excessive pricing is high was also confirmed by a recent Opinion by European Court of Justice’s Advocate General Wahl. However, as the South African investigation shows, non-EU regulators are examining theses cases with interest.
In South Africa, Pfizer is suspected of overcharging for the lung cancer treatment xalkori crizotinib and Roche is suspected of having charged excessive prices for the breast cancer treatments Herceptin and Herclon. Aspen, South Africa’s biggest generic drug maker, is suspected of having overcharged for Leukeran, Alkeran and Myleran. The press release from the South African Competition Commission expressly refers to the prior Italian investigation involving Aspen as well as the recently opened investigation by the European Commission as a result of which “the Commission has reasonable grounds to suspect that Aspen may be engaging in similar conduct locally.” The Competition Commission will also investigate whether Roche may have engaged in so-called ‘ever-greening’, i.e. delaying and/or preventing generic entry of alternative breast cancer drugs through making minor changes to its medicines close to their patent expiry in an attempt to be granted second generation patent protection. In addition, it will investigate whether Roche used a ‘patent thicket’ strategy to delay and/or prevent generic entry, i.e. a strategy preventing the development of alternative versions of its medicines by restricting the processes whereby a drug is produced (it also limits the number of forms of the AIP that generic companies can make, thereby eliminating possible substitutable products).