Brief

EU investigating generic drugmaker over cancer drug price hikes

Dive Brief:

  • European antitrust regulators are investigating Aspen Pharma, a generic drugmaker based in Durban, South Africa, for allegedly abusing its "dominant market position" and sharply increasing the prices of five off-patent chemotherapy drugs. 
  • The scrutiny of Aspen's pricing practices marks the first time the European Commission has formally investigated excessive prices in the pharmaceutical industry, reflecting growing concerns on both sides of the Atlantic of rising costs for generic drugs. 
  • According to the EC, Aspen raised prices for chlorambucil, melphalan, mercaptopurine, tioguanine and busulfan by several hundred percent after acquiring the drugs following expiry of patent protection. 

Dive Insight:

Rising drug prices have received more attention in the U.S. than in Europe, where legal checks have limited increases in some countries. But the EC's formal investigation into Aspen's pricing of five cancer drugs underscores broadening scrutiny of whether markets for pharmaceutical products are functioning properly. 

The Commission cited evidence Aspen had threatened to withdraw the drugs from market in several E.U. member states in order to extract higher prices from national health authorities. (Under EU rules, national governments can adopt their own rules for the pricing of medicines and can choose which drugs are reimbursed through social security programs.)

"Companies should be rewarded for producing these pharmaceuticals to ensure that they keep making them into the future," said Commissioner Margrethe Vestager. "But when the price of a drug suddenly goes up by several hundred percent, this is something the Commission may look at."

The EC's investigation will assess whether Aspen broke EU antitrust rules which prohibit the abuse of dominant market positions. 

Aspen has already run afoul of Italian competition authorities, which fined the company €5 million last October for increasing the price on four of the five drugs flagged by the EU by between 300% and 1,500%. The regulator noted Aspen had credibly threatened to disrupt the supply of the drugs to Italy during its negotiations with the Italian Medicines Agency.

While rising pharmaceutical prices have sparked criticism of the entire biopharma industry, generic drug markets have been under a microscope. In the U.S., companies like Turing Pharmaceuticals have bought rights to older, off-patent drugs and raised prices sharply, leading to widespread public and legislative outrage.

In certain cases, some drugs have been manufactured by a single supplier, giving the acquiring company a de facto monopoly to exert greater pricing power — a type of regulatory arbitrage that Scott Gottlieb, the newly sworn in Commissioner of the Food and Drug Administration, has said he might tackle. 

Legal challenges in the U.S. could throw more cold water on the generic drug industry, too. In December 2016, 20 state attorney generals sued six generic drugmakers over alleged price fixing and the Department of Justice is moving forward with its own pricing probe. 

For its part, in Europe, Aspen has said it remains committed to "fair and open competition in markets in the European Union and around the world." The EC said it would carry out an in-depth investigation as a matter of priority, but did not give any timeline on its inquiries.

While efforts in the U.S. and the EU are obviously separate and under distinct regulatory frameworks, the EC's investigation of Aspen shows government interest in generic drug pricing isn't just limited to the typically higher-cost U.S. market.

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Top image credit: Wikimedia; MPD01605