The Italian Competition Authority (ICA) has imposed a fine of $5.7 million on Aspen Pharmcare (largest drug company in Africa) for boosting the price of off-patent cancer drug by around 1,500 percent. Aspen purchased drugs from GlaxoSmithKline before going on to take a hard line in pricing negotiations with the Italian Medicines Agency (AIFA).
In a report, ICA accuses Aspen Pharmacare of adopting a negotiating position that lead to a threat to disrupt the supply of the 5 products. As the sole supplier of the drugs, Aspen was in a strong position getting into the negotiations and used this to seek for price raises ranging from 257 to 1,540 percent. During this period, some of the drugs became unavilable for patients, prompting a customer group and, later, the antitrust regulator to look into the matter.
ICA imposed the fine after investigating on the costs charged by Aspen Pharmacare that were in disproportion with the cost of production and marketing. Aspen generated not much revenue from the drugs — ICA puts sales at approximately $5 million to $11 million — but authorities chose a fine commensurate with the size of its organization, not just the aspect of its business being investigated.
ICA took the approach to setting the size of the fine in order to ensure the penalty was an effective check to Aspen and other organizations which may be inclined towards pursue similar pricing strategies.