In the name of competition

gavel court legal

ACCC loses its appeal against a ruling rejecting a case over Pfizer’s steps to secure pharmacy business    

The Federal Court of Australia has rejected an appeal by the Australian Competition and Consumer Commission against an order previously made by the Court dismissing a proceeding against Pfizer for alleged anti-competitive actions.

The ACCC had reiterated its previous position that Pfizer contravened the Competition and Consumer Act 2010 (Cth) when it took “certain steps pursuant to a plan designed to enable Pfizer to compete in the market for the wholesale supply of a pharmaceutical (atorvastatin) to community pharmacies in Australia after the expiry of the Australian patent for atorvastatin held by Pfizer”.

In it’s preamble the full bench of the court said that, in the period leading to the expiry of its patent for atorvastatin (Lipitor), Pfizer took a series of steps to “avoid being ‘slaughtered’ (to use a word coined by certain Pfizer executives in 2011 in this context) in the market for the supply of atorvastatin in Australia”.

These included (among other steps) establishing the Pfizer Direct supply model which involved Pfizer supplying community pharmacies directly in lieu of doing so through wholesalers (DTP model); establishing in January 2011 a scheme where funds would accrue in the books and records of Pfizer to each community pharmacy to which Pfizer supplied prescription pharmaceuticals (accrual funds scheme); and making a bundled offer in January 2012 to all, “or virtually all, community pharmacies as to the terms upon which Pfizer would supply Lipitor and atorvastatin Pfizer which, amongst other things, tied the rebates that were available from the accrual funds scheme account to the quantity of Lipitor and atorvastatin Pfizer which each individual pharmacy purchased”.

In 2014 the ACCC commenced proceedings in which it alleged that Pfizer had contravened regulations by “taking advantage of the substantial degree of market power which the ACCC alleged that Pfizer held in the market for the supply of atorvastatin to, and the acquisition of atorvastatin by, community pharmacies in Australia”. This case was dismissed in 2015.

The full bench of the Federal Court has now backed this initial decision and dismissed the ACCC appeal.  

The court also ruled that within 14 days of the decision date (25 May), each party is to file and serve a written submission of no more than 6 pages in length, setting out the order or orders for costs which that party seeks and its submissions in support of that request.

However, the case may not end here, with ACCC Chairman Rod Sims saying in a statement that the “ACCC is carefully considering the judgment.”

“The ACCC brought this appeal because it was concerned that Pfizer’s use of its market position as supplier of the top selling branded atorvastatin immediately before generic products were able to enter the market harmed the competitive process and therefore consumers,” he said.

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