CADE decides to close preparatory proceeding on abusive prices in the pharmaceutical sector

The Administrative Council for Economic Defense (CADE) decided in September to close a Preparatory Proceeding (PP) that investigated the alleged conduct of patent law abuse in the sales of medications for the treatment of Hepatitis C, without imposing any penalty.
The PP was launched due to a complaint filed by entities in the consumer protection and health sectors, who alleged abuse of dominant position by the companies of the Gilead group. The alleged conducts practiced would be: (i) price discriminating the federal entity that purchases its products; and (ii) arbitrary price increases for certain medications. In addition, the Representatives requested the imposition of a preventive measure on the Gilead companies to market sofosbuvir (an antiviral drug for the treatment of Hepatitis C) at competitive prices.
In its defense, Gilead said there were legitimate economic justifications for the difference in the prices being practiced, such as the need to offer better prices to those who purchase larger quantities of the drug. Since price discrimination is not an offense per se, there would be no illicit act being committed here. Regarding the alleged excessive prices, it sustained that there was no abuse of patent power, because its medications are innovative and bring benefits to the consumer. They also stated that there are substitute medications for those supplied by the company, and furthermore, the prices of the medications are regulated by the Drug Market Regulation Chamber (CMED).
Given this, after conducting econometric analyses, CADE’s General Superintendence (GS) issued a Technical Note concluding that there was no evidence of alleged anticompetitive conduct by the Respondents, since the price limits imposed by the pharmaceutical regulation were observed, as well as the gradual and recurring reduction in the price of their products.
It is also important to note that the GS emphasized that it is not its competence to decide whether the prices set by the regulatory agency are abusive. Therefore, the Representatives must present such discussion to the competent bodies to satisfy their interests.
The Preparatory Proceeding can be accessed here.