Competition Commission stops investigation into TB drug as price drops

The Competition Commission has halted an investigation into a Tuberculosis (TB) drug after its intervention saw the price drop by 40%.

The commission has therefore decided not to prosecute a complaint of alleged anti-competitive conduct initiated against Johnson & Johnson and its subsidiary company, Janssen Pharmaceutica.

The Commission investigated allegations of abuse of dominance after the companies filed a secondary patent for Bedaquiline (trading as Sirturo®), a drug used in the treatment of tuberculosis (TB), effectively restricting the entry of generic alternatives.

After extensive engagement with the two companies, the commission decided not to refer the complaint to the Competition Tribunal for prosecution and the companies, in turn, agreed not to enforce the Bedaquiline patent in 134 low- and middle-income countries, including South Africa, opening the market allowing for the entry of generic suppliers.

In addition, the companies renegotiated the Bedaquiline prices they companies charged the National Department of Health. Accordingly, the price of Bedaquiline was reduced by approximately 40% from R5 577.12 to R 3 148.00 inclusive of VAT and logistics. The price is aligned with the price the companies offer the Global Drug Facility, the world’s largest procurer of TB medicines and diagnostics.

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Complaint came after filing of secondary patent for TB drug

According to the commission, the complaint was initiated in September 2023 based on information that the two companies filed a secondary patent for Bedaquiline in South Africa with the Companies and Intellectual Property Commission (CIPC), effectively prolonging the lifespan of the Bedaquiline patent to 2027.

If this was indeed the case, this conduct effectively restricted the entry of generic medication and allegedly enabled these companies to charge excessive prices to the Department of Health. The conduct was assessed as a possible contravention of Sections 8(1)(c) and 8(1)(a) 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 and will continue to prioritise work in secondary patents and act particularly where secondary patents failed in other jurisdictions with more rigorous assessments.

Meritless secondary patents

In addition, the commission calls on pharmaceutical companies to reconsider their secondary patenting practices in South Africa. Moving forward, the commission may seek penalties if pharmaceutical companies continue to pursue meritless secondary patents, the commission says. 

The decision to non-refer, therefore, concludes the investigation against the two companies, although the commission reserves the right to investigate should new evidence emerge suggesting the possible abuse of dominance in the provision of Bedaquilline.