Commission drops investigation of Aspen

THE Competition Commission has dropped its investigation into pharmaceutical company Aspen for allegedly charging excessive prices‚ because the commission has learned that the prices of cancer drugs it sold were not high.

In June‚ it said it was investigating Aspen for “suspected abuse of dominance by charging excessive prices in the provision of lifesaving cancer medicines in South Africa”.

The motivation for an investigation into the South African company appeared to be the fact that Aspen increased its cancer prices by between 300% and 1 500% in Italy, leading to a major investigation there.

The commission said at the time that it had possession of information that Aspen had engaged in the same conduct in South Africa.

But what it failed to note is that drug price increases are set by the government every year and the prices and annual increases are publicly available.

At the time‚ Aspen said the drugs under investigation had increased‚ on average‚ 6.25% a year since 2009 when it bought the drug portfolio from GSK.

For example‚ the drug used for leukaemia‚ Leukeran‚ costs between R2 800 and R4 800 a month a patient.

Myleran‚ used for blood cancer‚ costs about R2 086 a month.

However‚ it appears the commission did not know this before its statement accusing Aspen of suspected excessive pricing.

The commission also complained in June that Aspen was being dominant as it was the only firm selling these old blood cancer drugs.

However‚ the drugs are very old and are not made by other companies due to very limited demand for them.

The commission backtracked yesterday and said: “Based on the information gathered to date‚ the commission has decided to drop the investigation against Aspen because an excessive pricing case cannot be sustained against them.”

Aspen will not take any action against the commission and it thanked the commissioner for fasttracking the investigation.

The commission will continue its investigation into Roche regarding the price of Herceptin‚ a breast cancer drug that reduces a specific form of breast cancer from returning by about 40%.

It will also continue to investigate Pfizer for the price of a lung cancer drug‚ crizotinib‚ that is not registered in South Africa but is imported here under special licence.

In another matter, the national Treasury said it defended its contract with Vodacom to provide cellphone packages to 20 government departments‚ after the commission said it was investigating Vodacom for uncompetitive behaviour.

Vodacom won the five-year tender to provide the highest-spending government department with contracts from September last year until 2020.

The Treasury said the contract was to save money rather than having individuals or individual departments negotiating cellphone contracts.

The commission said yesterday this five-year exclusive agreement entrenched Vodacom’s dominance and was bad for other mobile providers’ market share.