The Italian Autorità Garante della Concorrenza e del Mercato (“AGCM”) has fined Aspen over €5 million for having abused its dominant position – in violation of Art. 102 of the Treaty on the Functioning of the European Union – by increasing prices of its anti-cancer drugs Alkeran (melphalan), Leukeran (chlorambucil), Purinethol (mercaptopurine) and Tioguanine (thioguanine) by up to 1,500%. Aspen had previously acquired the rights to commercialise these drugs, internally referred to as the “Cosmos” drugs, from GlaxoSmithKline. Aspen achieved the price increases by adopting an aggressive negotiating strategy with the Agenzia Italiana del Farmaco, including threating to stop the supply of the medicines on the Italian market (at the time, Aspen was the only company supplying these medicines in Italy). Aspen was able to achieve price increases of between 300% and 1,500% (over the prior price).
In its analysis, the AGCM first defined the national markets using ATC5 classifications. In light of Aspen’s position in markets defined this narrowly, it concluded that Aspen held a dominant position on the various markets.
In concluding that Aspen had abused its dominant positions, the AGCM applied a two-phase test, namely:
as a first step, it assessed whether there was an excessive discrepancy between the manufacturing costs of, and the prices applied by Aspen for, the products, concluding that this was the case;
as a second step, it assessed whether the prices applied by Aspen were excessive and unfair, taking into account a range of other factors, including the change in the prices over time, the lack of economic justification for the increases, the absence of any “extra economic” benefits for patients, the nature of the “Cosmos” drugs, the characteristics of the Aspen group and the damage (as a result of the increased cost) to the National Health Service.
Beyond the Aspen case, a number of other excessive pricing investigations by National Competition Authorities are currently on-going. For example, the UK’s Competition and Markets Authority (“CMA”) has recently pushed back for a second time the expected date of its final decision in its Pfizer/Flynn Pharma (“Flynn”) investigation (to November 2016). The CMA is investigating whether Pfizer and Flynn abused their dominant positions in various UK markets by charging ‘excessive and unfair’ prices for phenytoin sodium capsules. Pfizer allegedly charged between 8 and 17 times more for the drugs (at wholesale level) than it had charged for those same drugs at retail level before the deal, while Flynn charged between 25 to 27 times more for the products than Pfizer had charged at retail level.