Global Inquiries into Drug Price Increases
European competition authorities announced this week an investigation into Aspen Pharmacare’s recent price hikes of five cancer drugs. The European Commission said in a press release that it had “information indicating that Aspen has imposed very significant and unjustified price increases of up to several hundred percent.” The Commission is also looking into reports that the South African-based generic drug-maker withdrew or threatened to withdraw the drugs from countries that would not accept these price hikes. If the investigation demonstrates that Aspen abused its alleged dominant market position to increase prices, the Commission could order fines of up to 10 percent of the company’s yearly revenue.
This is the European Commission’s first investigation into alleged “excessive” price hikes by pharmaceutical companies. Individual European countries have, however, gone after drug companies for certain pricing practices. Italy imposed a €5 million ($5,539,475) fine on Aspen last year based on increases of up to 1,500 percent for the medicines at the center of the Commission’s probe. The United Kingdom hit Pfizer and Flynn Pharma with a fine of 89.4 million ($115,482,897) combined last December for alleged illegal price hikes of unbranded versions of an anti-epilepsy drug. Just two months ago, the United Kingdom announced that it was looking into whether Actavis UK and Concordia improperly inflated the price of hydrocortisone tablets between 2013 and 2016.
For their part, U.S. antitrust officials have long kept an eye on what they have characterized as excessive drug pricing. In 2000, the Federal Trade Commission (FTC) and 32 state attorneys general sued drug manufacturer Mylan and suppliers of a key ingredient of two anti-anxiety drugs for illegally agreeing to increase prices by 2000 to 3000 percent. The suit led to a settlement with $100 million returned to consumers and state agencies.
Mylan again found itself the subject of an FTC inquiry this January, when the agency announced it was looking into whether the company improperly quashed competition against Mylan’s EpiPen. Prices for the device reportedly increased from $100 in 2007 to more than $600 for a two-pack last year, prompting multiple consumer class action lawsuits and a Congressional inquiry. As we previously reported here, one of Mylan’s competitors filed suit this month alleging that Mylan had taken steps to inhibit competition. Meanwhile, an ongoing Department of Justice (DOJ) investigation into price-fixing among generic drug companies resulted in guilty pleas from two Heritage Pharmaceuticals executives early this year. And six generic-drug makers are defendants in a civil antitrust suit brought by 40 state attorneys general. The states allege that the companies conspired to fix the prices of an antibiotic and a diabetes medication. (We have previously covered DOJ and state investigations into drug price hikes here, here, here, here, here, here, and here.)
In the United States, it is well settled that price increases standing alone are not actionable under antitrust law. Price increases may simply be attributable to normal market forces, such as limited supply due to an ingredient shortage or demand due the unique attributes of a life-saving innovative drug. Only pricing that results from collusion among market participants or a supplier maintaining an unlawful monopoly can result in potential antitrust liability.
Nonetheless, with health care costs generating enormous public and media attention, drug pricing will undoubtedly continue to be a focus of attention by policy makers as well as antitrust regulators.