American drug companies are some of the most profitable corporations in the world. Profit margins of 10 percent, 20 percent, even 40 percent—returns even banks struggle to achieve—are not unknown for firms lucky enough to manufacture life-sustaining prescription pharmaceuticals.
They enjoy this stupendous success in no small part thanks to what amounts to price-fixing.
Not actually conspiracy to artificially keep drug prices high—although some companies allegedly do that, too—but by leaning on the U.S. government hard enough to ensure that potential competitors, who might offer sick people a similar product for less money, don’t have access to the domestic market despite promises from people like the president of the United States to give Americans cheaper prescription drugs (the prices of which meanwhile magically rise by four to eight percent every year).
It’s a phenomenal formula, but what do you do when it can’t be followed? How do you corner a market where you don’t have a few friendly members of Congress on hand?
According to British health authorities, U.S. pharma giant Merck & Co.—manufacturer of HPV vaccines, asthma inhalers and hair-loss solutions, among many other products—tried to guarantee big sales of an arthritis drug in an old-fashioned way: by shaking down doctors.
Merck, known overseas as MSD, markets an arthritis drug called Remicade. Its generic version, which other competing companies can manufacture after MSD’s patent expired in 2015, is called infliximab.
About 100,000 patients in the UK’s single-payer National Health System use one version of the drug or the other, a market worth a total of £150 million a year, according to the UK Telegraph. In other countries, cheaper “biosimilar” versions of the drug have “driven the branded drug from the market with aggressive discounting,” according to Pharmaphorum.com.
According to a watchdog agency in the UK, doctors weighing whether to prescribe MSD’s version or a competitor were offered a choice: Buy MSD’s Remicade at a discount, or try a competitor, whose version of the drug might not be quite the same—and lose your chance forever at the discount.
This is is a “breach of competition law… likely to restrict competition” from other companies, according to the British Competition and Markets Authority.
The watchdog agency has made an initial determination that, if sustained, it is a violation that could cost Merck “tens of millions of pounds” in fines, according to the newspaper.
Other American firms making every effort to reap profits in the UK similar to those enjoyed in the states have also run afoul of UK regulators.
Last year, Pfizer was fined £84 million for raising the price of an anti-epilepsy drug 27 times—which is what you can do when you have the market to yourself.
A Merck spokesman downplayed the accusations and insisted that the company loves a free market.
“The discounts in question meant that infliximab was competitively priced and offered savings to the UK NHS, without hindering competition,” the company claimed, according to the newspaper.