A tough pill to swallow: Pfizer Australia facing ACCC court action for alleged anti-competitive conduct over cholesterol drug

Pharmaceutical company Pfizer Australia is under fire from the Australian Competition and Consumer Commission for alleged anti-competitive conduct.

The ACCC has filed proceedings in the Federal Court alleging that Pfizer Australia engaged in misuse of its market power and exclusive dealing in relation to its supply of atorvastatin to pharmacies in contravention of the Competition and Consumer Act 2010.

Atorvastatin is a cholesterol lowering pharmaceutical product, sold by Pfizer under the brand name Lipitor.

The ACCC reports that for a number of years Lipitor was the highest selling prescription medicine under the Pharmaceutical Benefits Scheme.

Pfizer had a patent protection for the drug until May 2012. Before that time it was prescribed to over one million Australians, with annual sales exceeding $700m, the ACCC said.

The ACCC alleges that in early 2012, Pfizer offered “significant” discounts and the payment of rebates previously accrued on sales of Pfizer’s Lipitor, if pharmacies acquired a minimum volume of up to 12 months’ supply of Pfizer’s generic atorvastatin product.

The ACCC alleges that the offers were first made prior to Pfizer’s loss of patent protection for atorvastatin, during which time other suppliers of generic medicines could not compete.

ACCC chairman Rod Sims said in a statement that the ACCC alleges Pfizer engaged in this conduct for the purpose of deterring or preventing competitors from engaging in competitive conduct.

“Deterring anti-competitive conduct is an ACCC enforcement priority because of the harm that it can cause to the competitive process and ultimately to consumers, particularly with such a widely used product,” he said.

“This case also raises an important public interest issue regarding the conduct of a patent holder nearing the expiry of that patent and what constitutes permissible competitive conduct.”

The ACCC is seeking pecuniary penalties, declarations and costs, with a directions hearing set for March 18 in the Federal Court, Sydney.

Pfizer issued a statement to say it does “not ordinarily comment on matters that are before the Court”.

“Pfizer believes strongly that the offers referred to by the ACCC were competitive. We will vigorously defend the proceedings. As the matter is before the court, it is inappropriate for us to comment further.”

The news comes amid preparations for the federal government’s “root and branch” review of the competition law.

Small Business Minister Bruce Billson issued a statement saying the federal government would “keep a close eye on the ACCC’s case against Pfizer for its alleged misuse of market power ahead of an independent ‘root and branch’ review of competition law”.

“As part of the ‘root and branch’ review of competition law the independent panel will look at claims that the misuse of market power provision isn’t living up to the expectations that the law makers had at the time of its introduction,” the statement said.

“As a government we have made it clear we want competition based on merit not on muscle and competition law and policy settings that ensure that efficient business, big and small can prosper.”

The ACCC’s move to act against Pfizer Australia reflects similar action it took in late 2013 where it filed proceedings against Colgate, Cussons and Woolworths over an alleged laundry detergent cartel.

The Pharmaceutical Society of Australia declined to comment on the case at this stage.