Aspen Pharmacare’s share price has lost almost three-quarters of its value over the past five years. Picture: BLOOMBERG/WALDO SWIEGERS
Aspen Pharmacare’s share price has lost almost three-quarters of its value over the past five years. Picture: BLOOMBERG/WALDO SWIEGERS

The European Commission has requested feedback on a proposal by Aspen Pharmacare to cut prices on six cancer drugs by three quarters, to remove concerns over excessive pricing.

The European Commission began an investigation in May 2017, citing concerns Aspen had been abusing its dominant position in a number of markets by charging excessive prices for critical off-patent cancer medicines.

After acquiring the cancer medicines from another company, Aspen started to increase their prices in Estonia, Germany, Latvia, Lithuania, Poland, Sweden and the UK in 2012 and then implemented the same strategy in all other countries in Europe where Aspen sold the medicines, the commission said in a statement.

“In certain cases, high profit margins can be explained by, for example, the need to reward significant innovation and the commercial risk-taking. However, the commission’s investigation has not revealed any justifications for Aspen's very high profit levels,” the commission said.

Aspen’s prices exceeded its relevant costs by almost 300% on average, including when accounting for a reasonable rate of return, although differences did exist between products and countries, the commission said. Aspen's medicines have been off-patent for 50 years, which meant that any research and development (R&D) investment on the medicines had already been fully recouped, the statement read.

Aspen has proposed to cut the prices of the drugs, on average, by 73%. These reduced prices would be the maximum that could be charged for at least 10 years. Aspen would guarantee the supply of the medicines for the next five years, and, for an additional five-year period, will either continue to supply or make its marketing authorisation available to other suppliers.

Aspen said in a statement it was “pleased that the commission has responded positively to the proposed commitments and is hopeful that the result of the market testing will also be supportive of the proposed resolution of this matter”.

Interested parties have two months to submit their views.

In afternoon trade on Tuesday, Aspen's share was down 3.57% to R141.20, putting it on track for its worst one-day performance in about three weeks.

gernetzkyk@businesslive.co.za

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