The Competition Commission and pharmaceutical giant Johnson and Johnson (J&J) and its subsidiary Janssen Pharmaceuticals have reached an agreement in terms of which J&J will not enforce its patent over a key drug for tuberculosis (TB) in 134 low and middle income countries and will lower the price it charges the Department of Health for the drug by about 40%.
Not enforcing its patent will open the market to generic suppliers and reduce the price of the drug.
On the back of this agreement the commission has decided not to prosecute a complaint of alleged anticompetitive behaviour against the companies which was initiated in September 2023. The complaint was based on their application for a secondary patent for the drug, Bedaquiline which is used to treat multi-drug resistant TB.
The commission decided not to refer the complaint to the Competition Tribunal for prosecution.
The agreement was hailed by Health Justice Initiative (HJI) founder Fatima Hassan who said it marked a “capitulation” by J&J. It was also welcomed by Medecins Sans Frontieres access campaign advocacy adviser Candice Sehoma who said Bedaquiline was widely used in SA and the reduction in price would assist the financially constrained department of health significantly.
Department of health spokesperson Foster Mohale said the price reduction would contribute positively to the department's “efforts to make the best and affordable treatment options available to our patients in need”.
The commission investigated allegations of abuse of dominance by the two companies after they filed an application for a secondary patent for Bedaquiline (trading as Sirturo) with the Companies and Intellectual Property Commission (CIPC). This effectively restricted the entry of generic alternatives.
J&J and its subsidiary have reduced the price of Bedaquiline charged the Department of Health by about 40% from R5 577.12 to R3 148.00 inclusive of VAT and logistics.
“The price charged to the national department of health is aligned to what the companies are offering to the Global Drug Facility (the world’s largest procurer of TB medicines and diagnostics),” the Competition Commission said in a statement.
An approved secondary patent for Bedaquiline would have prolonged the lifespan of the patent to 2027.
“This conduct effectively restricted the entry of generic medication, and allegedly enabled these companies to charge excessive prices to the national department of health,” the commission said.
“The conduct was assessed as a possible contravention of the Competition Act. The commission is satisfied that the objectives of the act, together with the public interest, are served by the change in conduct.
“The commission will continue to prioritise work in secondary patents and act particularly where secondary patents have failed in other jurisdictions with more rigorous assessments.
“The commission calls on pharmaceutical companies to reconsider their secondary patenting practices in SA and moving forward the commission may seek penalties if pharmaceutical companies continue to pursue meritless secondary patents.”
Hassan said HJI was “encouraged that the competition regulator is finally taking the matter of health product patent evergreening seriously. The capitulation by J&J and the announcement of the Competition Commission off the back of years of TB activism must mark the beginning of many more investigations into rampant incremental patenting in SA by global companies that are getting a free ride through SA's outdated and apartheid era patenting regime.
“Going forward pharmaceutical companies especially need to be held in check and to account and this is why as HJI we call on the new trade industry and competition minster Parks Tau to expedite SA's patent law amendments, as his predecessor failed to do so even during a pandemic.
“Our only regret today is that J&J was not compelled to pay a hefty fine for taking advantage of the weak patent laws in our country to drive up profits when it charged us exploitive prices and exercised monopoly control.
“Hopefully the Competition Commission's investigation will also be a warning sign to other companies who are benefiting from an indefensibly lax patenting regime in SA and elsewhere in Africa,” Hassan said.
“These companies must now be interrogated and investigated by regulatory agencies for its pricing and evergreening patenting strategies for several key medicines needed to prevent and treat HIV, cancer, cystic fibrosis, TB and other diseases affecting our people.”
Sehoma hoped that the commission's decision would set a precedent and that it would investigate other pharmaceutical companies.
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