Big Pharma's Johnson & Johnson under investigation in South Africa over 'excessive' drug prices

U.S.-based pharmaceuticals company Johnson & Johnson is being investigated in South Africa for allegedly charging “excessive” prices for a key tuberculosis drug, the country's antitrust regulator said Friday.

J&J's Belgium-based subsidiary Janssen Pharmaceuticals is also under investigation, South Africa's Competition Commission said.

The commission, which regulates business practices, said it opened the investigation this week based on information that the companies “may have engaged in exclusionary practices and excessive pricing” of the tuberculosis drug bedaquiline, which is sold under the brand name Sirturo.

The Competition Commission declined to give further details of its investigation, but health advocacy groups in South Africa say the country is being charged more than twice as much for bedaquiline than other middle- and low-income countries.

Bedaquiline was approved in 2012 and is used to treat drug-resistant TB. It is desperately-needed by South Africa, where the infectious disease is the leading cause of death, killing more than 50,000 people in 2021. South Africa has more than 7 million people living with HIV, more than any other country in the world. The World Health Organization says that nearly one-third of deaths among people who have HIV/AIDS are due to tuberculosis.

Globally, TB cases increased in 2021 for the first time in years, according to the WHO.

J&J has previously faced calls to drop its prices for bedaquiline and said last month that it would provide a six-month course of the drug for one patient through the Stop TB Partnerships Global Drug Facility at a cost of $130.

The South African government purchases its bedaquiline directly from J&J and Janssen and not through the Stop TB facility and was paying around $280 for a six-month course for a patient, according to Professor Norbert Ndjeka, who leads the national department of health's TB control and management.

Ndjeka said that South Africa had recently concluded a new two-year deal with J&J for bedaquiline at a slightly higher price than $280 per course, according to a report on the News24 website.

The Competition Commission said it was confirming the investigation due to heightened media interest, but would not respond to requests for comment or more information about the probe.

It comes a week after a health advocacy group released details of South Africa's COVID-19 vaccine purchase contracts with numerous pharmaceutical companies, including J&J and U.S.-based Pfizer. They were obtained after the group, the Health Justice Intiative, won a freedom of information case in court.

The group says the contracts show J&J charged South Africa 15% more per vaccine dose than it charged the much richer European Union. Pfizer charged South Africa more than 30% more per vaccine than it charged the African Union, even as South Africa struggled to acquire doses while having more COVID-19 infections than anywhere else on the continent.

In the contract, South Africa was required to pay Pfizer $40 million in advance for doses, with only $20 million refundable if the vaccines weren't delivered, the Health Justice Initiative said. J&J also required a non-refundable downpayment of $27.5 million.

Pfizer reported record revenues of $100.3 billion in 2022. J&J made $94.9 billion in sales last year.

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