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Australia – Pfizer Sued For Anti-Competitive Conduct.

9 May, 2014

 

Legal News & Analysis – Asia Pacific – Australia – Competition & Antitrust

 

The Australian Competition and Consumer Commission (ACCC) has recently commenced proceedings against Pfizer Australia Pty Ltd (Pfizer) for alleged misuse of market power in contravention of Australian competition law.

 
The ACCC argues that Pfizer, in the period leading up to, and shortly after, the expiry of its patent for “blockbuster” pharmaceutical atorvastatin (sold under the brand Lipitor), engaged in conduct intended to prevent or deter generic suppliers of atorvastatin from entering the Australian market, thereby misusing its power in the supply of atorvastatin.

 
The ACCC alleges that:

 

  • Pfizer had substantial power in the Australian market for the wholesale supply of atorvastatin to community pharmacies – until 18 February 2012, Pfizer was the only company that could legally supply atorvastatin in Australia;
  • Pfizer used that substantial power to offer discounts and rebates that were dependent on community pharmacies purchasing substantial volumes of a generic atorvastatin product launched by Pfizer prior to the expiration of its Lipitor patent. This offer allegedly incentivised pharmacies to purchase large stockpiles of Pfizer’s generic atorvastatin before Lipitor lost patent protection, thereby limiting subsequent demand (and shelf space) for other generic atorvastatin products. The ACCC considers that Pfizer could not have made the offer without its privileged market position; and
  • this conduct was intended to prevent or deter suppliers of generic atorvastatin from competing in the atorvastatin market, which is a proscribed anti-competitive purpose under Australian competition law.

 

Pfizer denies that its conduct amounted to a misuse of market power. Importantly, Pfizer considers there is no market in Australia for the supply of atorvastatin; rather, the relevant market within which to analyse its conduct is a broader market in Australia for the wholesale supply of pharmaceutical products and over-the-counter products to community pharmacies.

 
The case is interesting because:

 

  • it represents the first attempt by the ACCC to discipline the conduct of originator pharmaceutical companies attempting to protect market share following the loss of patent exclusivity, which has been a recent area of focus for competition authorities globally (including in the EU and US);
  • it is the ACCC’s first allegation of misuse of market power in the health/pharmaceutical sector for many years; and
  • it comes at a time when the Australian Government is preparing for a comprehensive “root and branch” review of Australian competition law. That review is likely to include detailed consideration of the misuse of market power provisions – an area in which the ACCC has traditionally had difficulty in proving contraventions.

 

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For futher information, please contact:

 

Nigel Parr, Partner, Ashurst
nigel.parr@ashurst.com  

 

Mats Johnsson, Partner, Ashurst
mats.johnsson@ashurst.com 

 

Ross Mackenzie, Partner, Ashurst
ross.mackenzie@ashurst.com 

 

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