Viagra drugs giant faces Union probe into prices

Date: 06/09/01

By Laurence Frost

DRUGS multinational Pfizer faces an investigation by the European Commission after wholesalers complained that its pricing system in Spain breaks EU competition laws.

The move against the maker of Viagra raises the stakes in the legal battle between drugs firms and middlemen who seek to cash in on price differentials between Union countries.

The Commission is considering its next step after the Spanish drug wholesalers' federation, Fedifar, filed a formal complaint against Pfizer's dual-pricing policy in Spain."By charging a higher price for medicines bound for export, Pfizer is trying to stop parallel trade," said a Fedifar spokesman.

Under its pricing policy, Pfizer charges lower prices for drugs sold to Spain's national healthcare system. Its distributors are warned they will be re-billed at a higher price if they do not supply proof that the medicines were sold to the national health system.

The Pfizer scheme in Spain is similar to the dual-pricing deal operated in the country by GlaxoSmith-Kline, which has appealed to the European Court of Justice against a decision by the Commission last May to ban the practice.

But Pfizer maintains its policy was prompted by a new law approved by the Spanish parliament, which spells out that the lower drug prices negotiated with the health ministry should apply only to medicines paid for by the national system. "Pfizer's new commercial policy in Spain has been designed to apply the recent change in the Spanish pricing law in a manner that we believe is consistent with EU and Spanish competition rules," said company spokesman Bob Huber.

But the wholesalers insist Pfizer's compliance with Spanish law is not the issue. "It might not be an infringement of Spanish law but we believe it's a clear infringement of Community law," said the Fedifar spokesman. "The Commission has already made it clear it believes any dual-pricing system would be contrary to European law."

Amelia Torres, spokeswoman for EU competition chief Mario Monti, would not say when a decision might be reached on Pfizer. She added: "The Commission doesn't accept restrictions to trade in pharmaceuticals. The arguments used by industry to justify restrictions were answered in the Glaxo case." Besides Glaxo, the Commission has other cases or complaints pending against Merck and Bayer.

The middlemen say their annual revenue of €1.24 billion in parallel trade reduces costs to patients and healthcare systems, and keeps price differences between countries in check. But drug makers say the trade hits their profits and threatens research into new medicines.

The 'G10' panel of pharmaceuticals' CEOs and Commissioners will discuss price disparities when they meet in Brussels on 26 September. New York-based Pfizer had sales of more than €30 billion last year.

Drugs multinational Pfizer faces an investigation by the European Commission after wholesalers complained that its pricing system in Spain breaks EU competition laws.