INCREASE IN DRUGS PRICES (Start of full phase investigation)
PRESS RELEASE
The Italian Competition Authority has initiated three investigations against some drugs manufacturers in order to ascertain alleged violations of Section 2 (agreements) of Law no. 287/90.
The Authority concluded recently its fact-finding investigation into the pharmaceutical sector and found a number of cases where two or more drugs that pertain to the same market segment and are totally charged to patients have shown the same price trend over 1996 and 1997. That is, after the complete liberalization of the price of such drugs, which took place in November 1995.
This price policy is adopted either when firms imitate the behavior of the marker leader (this is realistic assuming that there are non-simultaneous price variations), or do so as a result of concerted practices (in the case of simultaneous price variations) and, therefore, in violation of the Competition Act. Both the conduct patterns above would be eased by the extreme transparency of price policies carried out by the firms even on consequence of a single price scheme applied to the all national territory, which facilitates the knowledge of competitors’ pricing.
The first investigation deals with drugs for obesity and substances for capillary protection. Servier Italia and Istituto Farmaco Biologico Stroder are the parties involved. The second inquiry involves Byk Gulden Italia and Istituto Gentili and relates to immunostimulants. Last, the third one investigates into drugs for ipercholesterolemia. In this case, Istituto Gentili, Merck Sharo & Dohme, Neopharmed, Sigma-Tau and Mediolanum Farmaceutici are the drug manufacturers concerned.
During the fact-finding investigation it was ascertained that the price trend of certain drugs was unlikely to be justified as a result of independent decisions made by manufacturers in order to maximize sales and gain market shares. Indeed, the fact that the price trend of competing drugs would occur, as in the cases in question, through equal variations applied simultaneously by producers, could lead to allege a concerted practice between themselves.
The three investigations are to be concluded by October 1998.