Aspen faces fine in Italy
The JSE-listed pharma group says it did not tell shareholders as the €5.2m fine is ‘immaterial’ in the broader Aspen context
JSE-listed Aspen Pharmacare had not told shareholders about the €5.2m fine it was facing from the Italian Competition Authority (ICA) for alleged unfair pricing for its cancer drugs, because the value of the fine was "immaterial" in the broader Aspen context and did not justify an announcement, it said on Tuesday.
The fine, about R78m in rand terms, relates to price increases on four of Aspen’s drugs used in the treatment of blood cancers: Leukeran, Alkeran, Purinethol and Tioguanine.
The ICA said on Friday it would fine Aspen for fixing unfair prices on these drugs, which it purchased from GlaxoSmithKline. Aspen had used the threat of interrupting the supply of the drugs to the Italian market to win price increases from the Italian Medicines Agency ranging between 300% and 1,500% of the initial prices, the ICA said. This was in contravention of the EU’s rules, the authority said.
The ICA said its investigation took into consideration, among other aspects, the cost to manufacture the drugs and the damage caused to Italy’s national health system.
Aspen would appeal in court against the ICA’s decision, its Italian unit said on Tuesday. "Aspen is confident that it will be awarded a full annulment of the ICA’s decision in terms of this appeal."
Before it increased the prices, the four drugs had not been subjected to any price increases in Italy in more than 50 years, Aspen said. A pack of 25 tablets cost on average €50 (R725) for each of the four products concerned, based on Aspen’s calculations. "The pricing remains significantly below alternative treatment in each particular therapeutic class," it said.
In SA, medicine prices are capped, 25 Leukeran tablets cost R514, according to data from Code for SA. The same pack of Alkeran tablets cost R688.
"The issue is a moral one," said Asief Mohamed, chief investment officer at Aeon Investment Management, which is overweight in Aspen shares. It was concerning if Aspen had engaged in price gouging, and the company should have issued a Sens statement, Mohamed said.
Aspen’s share price was little moved on Tuesday. The company posted revenue of R35bn for the year to June.