Aspen kept price rises to legal limit
Generic drug maker Aspen Pharmacare, which faces a probe by the Competition Commission over the price of some of its cancer drugs, has kept its South African price increases within the limits set by the health department, an analysis by Business Day shows.
Generic drug maker Aspen Pharmacare, which faces a probe by the Competition Commission over the price of some of its cancer drugs, has kept its South African price hikes within the limits set by the health department, an analysis by Business Day shows.
The local scenario is in sharp contrast to Europe, where Aspen is being investigated by competition authorities for implementing steep price hikes on the same drugs.
The South African Competition Commission announced last Tuesday that it was launching an investigation into Aspen, Roche and Pfizer over the price of their cancer drugs.
The Aspen drugs in question are Leukeran, Alkeran and Myleran, which were in a portfolio of off-patent drugs it acquired from GlaxoSmithKline in December 2009.
Aspen said last week that these drugs were affordable and fully reimbursed by medical schemes, and that it had not introduced any price increases that were above the limits in SA’s regulatory framework.
Data provided by the Department of Health back up Aspen’s position, showing that it neither introduced any extraordinary price increases after it acquired the products, nor pushed up prices above the annual increases allowed by the department. This may explain why Aspen’s shareholders shrugged off news of the commission investigation, leaving its share price unchanged.
Institutional investors would have a good handle on the regulatory environment in which pharmaceutical manufacturers operate in SA, which provides limited scope for medicine price rises in the private sector.
The key issue is the launch price of a medicine; after that price increases are controlled by regulations to the Medicines and Related Substances Act.
Aspen’s private sector prices for Leukeran, Alkeran and Myleran show increases in line with each of the single-exit price increases announced by the health department between 2009 and 2016. For example, the single-exit price increase for 2010 was 7.4% and this is precisely the hike levied by Aspen on all three of these products that year.
The same pattern is seen in the years that follow: in 2012, the increase was 2.14%; in 2013, it was 5.8%; in 2014, it was 5.82%; in 2015, it was 7.5%; and in 2016, there was a 4.8% rise and an extraordinary increase of 2.9%. There was no increase in 2011.
SHAREHOLDERS SHRUGGED OFF NEWS OF THE COMMISSION INVESTIGATION