There is a history of competition law being used to drive HIV medicine prices lower in South Africa. Now, two cases involving cancer medicines seem set to nail down what qualifies as "excessive pricing" in South African law - a legal development that could have far reaching implications for medicines prices in the country.
The Competition Commission played a pivotal role in South Africa's historic fight for access to HIV medicines. A decision made by the Competition Commission in 2003 helped open the door for affordable generic HIV medicines. Twenty years later, another Competition Commission decision likely contributed to a pharmaceutical company agreeing to forego their patents on an important tuberculosis medicine.
Now, two other cases, focused on the pricing of two cancer medicines - lenalidomide and trastuzumab - are quietly making their way through the Competition Commission's processes. These cases could have far-reaching implications for how medicines are priced in South Africa.
The key to generic ARVs
To understand why the current cases are so important, some background is needed.
In the early 2000s, life-saving HIV medicines remained inaccessible to all but the wealthiest people in South Africa and much of the world. It has been estimated that more than 300 000 people died prematurely from HIV-related causes in South Africa between 2000 and 2005, due to the deadly combination of medicine unaffordability and government-led AIDS denialism.
As part of their efforts to secure access to life-saving HIV treatment, the Treatment Action Campaign and the AIDS Law Project (now SECTION27) challenged the prices charged for HIV medicines. They did this by lodging a complaint with the Competition Commission against two major pharmaceutical companies, GlaxoSmithKline (GSK) and Boehringer Ingelheim (BI). They argued that the companies were engaging in excessive pricing and anti-competitive behaviour.
The case was one of the first major tests of South Africa's revamped, post-apartheid competition legislation. The law in question, the 1998 Competition Act, set up the Competition Commission, Competition Tribunal, and Competition Appeal Court. The idea was that matters could be taken to the commission, and if the commission deemed there to be a case worth looking at, sent on to the tribunal.
In this instance, the commission found evidence supporting TAC and SECTION27's complaint and referred the matter to the tribunal for hearings and a decision.
But, since GSK and BI then decided to settle the case, it was never actually heard before the tribunal. As part of the settlement, GSK and BI licensed several companies to supply generic ARVs to sub-Saharan Africa. Consequently, the price of HIV medicines fell to a fraction of what it was previously. This helped facilitate the massive public sector rollout of HIV medicines that followed.
We scored a big win when J&J dropped their patent on #TB medicine after the @CompComSA initiated a probe. 20 years ago, a similar case helped drive down #antiretroviral prices, write @_HassanF and Leena Menghaney. @HealthJusticeIn @MSF @HealthJusticeInhttps://t.co/IORBMmJS4n -- Spotlight (@SpotlightNSP) August 30, 2024
In a somewhat similar case, the Competition Commission announced in September 2023 that it had initiated an investigation into excessive pricing and exclusionary practices by Johnson & Johnson (J&J) for the tuberculosis medicine bedaquiline. Two weeks later, in a surprise move, J&J announced that it would not enforce its patents on bedaquiline in 134 low- and middle-income countries, meaning that generic bedaquiline could now be manufactured and used in these countries.
No firm precedent
In both the 2003 and 2023 cases, matters were resolved in the period between the commission referring it to the tribunal and the tribunal actually considering the matter. In neither case did hearings take place at the tribunal, nor did the tribunal make any findings.
In fact, to date, there have never been public hearings or a decision by the Competition Tribunal regarding what constitutes excessive medicine pricing in South Africa. This is the critical thing that may change with the two cancer medicine cases now making their way through the Competition Commission's processes.
Unlike with the 2003 and 2023 cases, there are no obvious things that the companies involved in the two cancer matters could do to settle and thus avoid hearings before the tribunal and eventual findings. That is because both cases relate to alleged harms caused by excessive pricing during time periods that have already ended.
The trastuzumab case
In February 2022, the Competition Commission referred a case of alleged excessive pricing of trastuzumab - a breast cancer medicine - manufactured by the pharmaceutical company Roche to the Competition Tribunal. In a press statement about the referral, the Competition Commission stated: "The Commission's investigation found that the excessive pricing conduct took place between January 2011 and November 2020 in the South African private healthcare sector, and in the South African public healthcare sector during the period 9 November 2015 to July 2020."
The statement continued: "The Commission has asked the Tribunal to impose a maximum penalty against Roche, for its alleged harmful and life-denying pricing conduct."
Almost three years have passed since the matter was referred to the tribunal, yet no hearings have taken place. "The Tribunal processes are slow due to the congested diary," Siyabulela Makunga, spokesperson for the Competition Commission, told Spotlight. "In the case of Roche referral, the delays have been compounded by Roche's jurisdictional challenge to investigate and refer a matter to the Tribunal. There was also an intervenor in the proceedings on the matter amounting to further delays," he added.
Then last week the Competition Commission announced that the Cancer Alliance - a collective of cancer advocates and organisations in South Africa - was admitted as an intervenor in the case and can therefore provide evidence for consideration in the case, including on how the alleged excessive price harmed patients. The Cancer Alliance is legally represented in the matter by SECTION27.
Regarding the allegations of excessive pricing, Esnath Muzenda, a communication officer with Roche, told Spotlight: "Roche rejects the allegations of the South African Competition Commission in the strongest terms and will contest all charges. All our medicines have been priced to ensure the broadest access possible in South Africa. At Roche, our primary contribution to society is to develop medicines and diagnostics that significantly improve people's lives."
"We are contesting this matter to seek an expedient and satisfactory resolution for the benefit of the health system, patients, and the ability of multinationals to bring innovation to South Africa. We will not have any further comment on this matter while it is ongoing," Muzenda said.
The lenalidomide case
Another case before the Competition Commission stems from a complaint that accuses the pharmaceutical company Celgene of overpricing the multiple myeloma medicine lenalidomide. The complaint was lodged by the Cancer Alliance in January 2023.
Like the trastuzamab case, the lenalidomide case is seeking remedies for excessive pricing over a period that already ended: April 2016 to December 2020.
When lodging the complaint, the Cancer Alliance submitted a detailed memorandum to the Competition Commission outlining why the price charged for lenalidomide between April 2016 and December 2020 was excessive and how excessive pricing harmed patients. An updated version of that memorandum can be viewed here.
The price of lenalidomide in South Africa rose and fell by over a thousand percent during the period of alleged abuse identified by the Cancer Alliance, Spotlight previously reported. The dramatic rise in the price seen for lenalidomide is relatively unheard of in South Africa, where price increases for registered medicines are strictly regulated by law. The dramatic price increase occurred partly because Celgene's more expensive originator product was only registered and made available in South Africa after cheaper generic products were already in use in the country - this usually happens the other way around.
Prior to the April 2016 registration of lenalidomide in South Africa, multiple myeloma patients and their healthcare providers were importing generic lenalidomide from India through Section 21 authorisations. This mechanism facilitated by the South African Health Products Regulatory Authority (SAHPRA) allows for the importation and use of an unregistered medicine when there is a demonstrable need for the unregistered product. Section 21 authorisations may be used to gain access to a medicine whose authorisation by SAHPRA is pending, or to obtain an equivalent version of an unregistered medicine when there is a shortage of the registered product.
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After the registration of Celgene's lenalidomide, SAHPRA halted Section 21 authorisations for importation of generics - reasoning that the authorisations were no longer needed because the medicine was now registered in the country. But, when Celgene launched its lenalidomide product in South Africa, it priced the medicine at over R70 000 per month - far higher than the cost of the generics which were being imported from India for around R5 000 per month. Overnight, many patients saw their access to this key lifesaving medicine cut off.
To regain access to generic lenalidomide, the Cancer Alliance worked with multiple myeloma patients, clinical haematologist Dr Mike du Toit, and Webber Wentzel to challenge SAHPRA's decision to halt Section 21 authorisations. They successfully argued that SAHPRA must continue to grant Section 21 authorisations for generic lenalidomide for patients that had previously accessed generics through this pathway because the price set by Celgene was prohibitive for many. New patients, however, would need to pay the far higher price charged by Celgene for its registered product.
In the private sector, the price charged by Celgene for lenalidomide exceeded what most medical schemes were willing to pay, leaving patients to cover substantial costs, ration or forgo treatment, or seek other avenues to bring in unauthorised generic products.
In the public sector, where most South Africans seek care, lenalidomide was simply unavailable due to its high price.
Securing access to generic lenalidomide
Celgene had sought at least 32 patents on lenalidomide in South Africa which could block access to generics until 2036, warned the Cancer Alliance in 2019. At the time, they appealed to the government to use available legal mechanisms to enable generic access in the country.
In the end, with significant attention being focused on lenalidomide pricing in South Africa, Celgene did not assert its secondary patents to block the entry of generic lenalidomide.
Generic lenalidomide then became available in South Africa in 2020 and prices dropped rapidly. The medicine was included on the National Essential Medicines List. It is now available in the public health sector, with the government paying R976 for a month's worth of lenalidomide.
Building the case
Although access to lenalidomide in South Africa is now resolved, the Cancer Alliance contends in their memorandum to the Competition Commission that Celgene should still be held accountable for excessively high prices on the drug between April 2016 and December 2020, which they argue was not only unaffordable for the majority of South Africans but also harmed patients.
In their memorandum, the Cancer Alliance used the affordability-based standard from the Competition Commission's 2003 HIV medicines case and other health economic methods developed since then to assess excessive pricing. The affordability-based standard was developed by James Love, an expert on the economics of access to medicines and director of Washinton-based non-profit Knowledge Ecology International. He proposed the following standard for determining if the price of a patented medicine is excessive: "For essential intellectual property goods in South Africa, a price that bears a reasonable relationship to the economic value of a good must at least be a price that most people in need of the good are willing and able to pay for it. A price that is too high for most people to afford is presumed to be excessive."
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In their memorandum, the Cancer Alliance argued that prosecuting companies charging excessive prices for medicines falls within the Competition Commission's Constitutional mandate to achieve the progressive realisation of the right to health within the state's available resources.
Paul Malherbe from the Cancer Alliance, told Spotlight that the alliance hopes for several outcomes from the case. These outcomes include setting a precedent for what constitutes excess medicine pricing, establishing deterrents against excessive pricing by companies, and providing a blueprint that can be used for pursuit of other excessive medicine pricing complaints in the country.
"Excessive medicine pricing is an ongoing issue because new medicines keep coming out. We can't afford to deal with them case by case. We have to have some set of laws, incentives, agreements, that resolves this issue going forward," said Malherbe. "This case is just trying to help create the circumstances under which that resolution takes place," he added.
Bristol Meyer Squibb, which acquired Celgene in 2019, did not respond to a request for comment on the allegations of excessive pricing of lenalidomide in South Africa.
What's next?
Almost two years have passed since the Cancer Alliance first lodged its complaint with the Competition Commission and the matter has not been referred to the Tribunal. "The Commission's investigation is advanced, and we anticipate issuing a decision before the end of this calendar year," said Makunga.
If the case is referred to the tribunal, it may still be years before public hearings take place and a decision is made, as seen with the trastuzumab case. When asked about the timeline should the lenalidomide case be referred to the tribunal, Makunga said: "It is difficult to make a prediction as circumstances are different in each matter."
Regarding how long it has taken, Malherbe said: "There are people who could have been witnesses at trial who have died [since Cancer Alliance lodged the complaint]. They can't do that now, and it's painful to see these delays, knowing it harms the ability of patients to see justice done."
Note: SECTION27 is involved in one of the cancer cases described in this article. Spotlight is published by SECTION27, but is editorially independent - an independence that the editors guard jealously. Spotlight is a member of the South African Press Council.
