CD Pharma Gouged Hospitals on Oxytocin, Danish Authority Says

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By Eleanor Tyler

CD Pharma srl is the latest pharmaceutical company charged with price gouging by European competition authorities, in this case by the Danish Competition Council for unexplained price increases on a drug used to induce labor and stop postpartum bleeding.

EU members, and the EU’s competition regulator itself, have stepped up enforcement against pharmaceutical pricing practices deemed abusive. The DCC’s charge follows price-gouging cases brought in the past few years by the EU, Italy, and the U.K. for some niche cancer treatments and an anti-seizure drug.

The Danish authority said Jan. 31 that it found an abuse of dominance by CD Pharma, a drug distributor, in its sales of Syntocinon (oxytocin). CD Pharma had an exclusive deal with Syntocinon’s manufacturer to distribute the drug in Denmark, which the DCC said allowed CD Pharma to jack up the price 2,000 percent over a six-month period in 2014. A wholesaler supplying Danish hospitals paid around 780,000 euros ($969,340) more during those six months because it had no alternative to CD Pharma for its supply of the drug.

The DCC said it will refer the case for prosecution by the Danish State Prosecutor for Serious Economic and International Crime. That referral means the case will be evaluated for prosecution in court, which could result in a fine for CD Pharma.

Danish law sets three levels for potential fines. Depending on the severity the authorities determine, the fine could range from 4 million kroner ($667,340) to more than 20 million ($3.337 million).

If Danish authorities were to fine CD Pharma for price gouging, it would be a rare event. No company has been fined for abuse of dominance in Denmark in more than a decade, according to a legal guide by Danish law firm Bruun & Hjejle.

Captive Patient Population

The pattern of conduct antitrust enforcers around the world target for excessive pricing is generally the same, George Washington University Law School professor and antitrust lawyer Donald Baker told Bloomberg Law in an earlier interview. A company buys the patent-expired rights to a drug for which there is a captive patient population with little alternative. The company then increases the price sharply without any increases in costs or other market changes.

The Danish authority described that exact scenario with Syntocinon. The drug, which has existed since the 1950s, is vital to public hospitals in Denmark. The “patent expired long ago,” the agency said, and prices had long been stable at around six euros per dose before CD Pharma took the price up to 127 euros.

The EU last year brought its first pharmaceutical excessive pricing case against Aspen Pharmacare Holdings Ltd. alleging similar circumstances surrounding a niche group of cancer treatments.

In 2016, Italy also fined Aspen Pharmacare and several subsidiaries 5.2 million euros for price gouging on most of the same drugs involved in the EU case. Italy’s competition authority said Aspen bought the suite of related patent-expired cancer drugs with the purpose of blackmailing national drug agencies into accepting price increases on threat of losing access to an entire class of vital medication.

The U.K.'s Competition and Markets Authority fined Pfizer Inc. and Flynn Pharma Ltd. 90 million pounds in 2016 for boosting the price of an anti-seizure drug by 2,600 percent “overnight” after gaming the U.K.'s branding system.

To contact the reporter on this story: Eleanor Tyler in Washington at etyler@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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