Four (4) Pharma companies under CCI scanner over price-fixing

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BY  DIVYA RAJAGOPAL

Swiss drug maker Novartis confirmed it has received a notice from CCI and that it has responded to it.


MUMBAI:Competition Commission of India ( CCI) has initiated an investigation against drug makers Abbott, Novartis, Emcure Pharma and USV over alleged price-fixing of the blockbuster anti-diabetic drug Vildagliptin, people aware of the development said. 


The fair play regulator has sent them notices seeking trade details of the drug, in an attempt to find out if the companies colluded with each other to keep its price at certain levels, they said. CCI is also looking at the involvement of senior executives of the companies, sources said. 


Swiss drug maker Novartis confirmed it has received a notice from CCI and that it has responded to it. “Given that the matter is sub-judice, you will appreciate that we are unable to comment any further,” a company spokesperson said in an email response to ET. Abbott did not respond to phone calls and an email sent by ETas of press time Wednesday. Emcure also did not respond to an email query as of press time, while USV remained unreachable for a comment. 


CCI’s notice comes 10 months after ET had reported that a whistle-blower had reached out to Indian regulators with details of cartel allegedly formed by these drug companies for the drug. Vildagliptin, sold under brand nameGalvus, is a proprietary drug of Novartis that comes under the new class of anti-diabetic drugs known as DPP 4 inhibitors. These drugs are prescribed for patients with Type 2 diabetes and considered far more effective in controlling blood glucose level compared to the older class of drugs. 


Novartis, which reported revenues of Rs 397 crore this year for the drug, has licensed the marketing rights to Abbott, Emcure and USV. This year, the combined sales of the brand of Vildagliptin were Rs 790 crore, in the Rs 2,600-crore gliptin market. 


The whistle-blower had reached out to regulators in February alleging Novartis controls Vildagliptin’s pricing structure, which is followed by the other licence holders, where the drug prices are matched to the lowest decimal. Though there is no written communication between partners, the companies also synchronise price change, the person alleged. To back these claims, the whistle-blower had sent a chart listing various dosage size of thesebrands, and all of them were priced in the same range. 


Price cartelisation is prohibited under Competition Act, 2002. Antitrust lawyers said though cartel enforcement has been a focus of CCI since the beginning, it has taken time to gain traction. Estimates suggest CCI has investigated several cases of cartels (including in the pharmaceuticals sector), imposing a fine of over Rs 7,500 crore on various companies and their officers. In the case of cartels, CCI may impose a penalty of three times the total profit of the enterprise responsible for the contravention or 10 per cent of turnover, whichever is higher, said a lawyer not wanting to be named because the person represents one of the companies under investigation.


Source: Google News

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