Drug maker fined for shorting supplies of cancer drugs in order to raise prices

Italian antitrust authorities last Friday fined Aspen Pharmacare, a large drug maker based in South Africa, nearly $5.5 million for halting supplies of several cancer drugs as a negotiating tactic designed to boost prices by as much as 1,500 percent.

The episode began after Aspen purchased the drugs from GlaxoSmithKline and began negotiations with the Italian Medicines Agency over pricing for the cancer medicines, including Leukeran and Alkeran. However, Aspen effectively used the threat of a shortage to win the prices sought, because the drugs temporarily disappeared from the market, according to the Italian Competition Authority.

After negotiations concluded in 2014, Aspen was able to raise prices by 300 percent to 1,500 percent, according to a 96-page ruling by the antitrust regulator, which noted, by the way, that the patents on the medicines had long since expired.

“Aspen started negotiations with the Italian Medicines Agency with the sole aim to obtain a high increase in prices, even in the absence of any necessary economic justifications,” the Italian Competition Authority said in a statement. “The negotiation strategy adopted by Aspen was so aggressive as to reach the credible threat of interrupting the direct supply of the drugs to the Italian market.”

Aspen could not immediately be reached for comment, but we will pass along any reply that we receive.

A key issue is that Aspen is the only supplier of these particular types of cancer treatments in the Italian market, underscoring that authorities believe the company abused its position. Regulators took action in response to a complaint filed by a consumer group, Altroconsumo Organizzazione, which had been contacted by patients who complained about shortages of the medicines.

“We are dismayed by this kind of pernicious practice which puts profits before consumers’ health,” said Illaria Passarani of the BEUC, the European Consumer Organization, a coalition of advocacy groups. “We are talking about lifesaving anticancer drugs being withdrawn from the market and reintroduced with an unaffordable price tag. The impact on consumers is not only serious but also unjustified.”

As far as consumer groups are concerned, the episode raises questions about the extent to which some shortages are due to legitimate manufacturing problems or may reflect a strategy to win higher pricing. In light of the development involving Aspen, the consumer group is calling on the European Commission to determine whether similar instances have occurred elsewhere.

“Shortages have unfortunately become commonplace in the EU and we need to know the reasons,” said Passarani. “Is the problem an unavailable ingredient or a deleterious commercial strategy? While the first is deplorable and requires solutions, the second one is totally avoidable and requires sanctions.”

A report that was issued last July by the Council of the European Union noted that shortages should be examined as part of wider concerns on access to medicines. In a related working paper, the council noted that a drug maker may decide to withdraw a medicine “for economic reasons or in order to switch demand to a new, patented medicine with the same or a similar active ingredient.”