Pharmacies Has Been Colluding, Fixing Medicine Prices

By:Nghiinomenwa-vali Erastus
Various pharmaceutical companies have been colluding and fixing medication prices by adding a 50% markup on the dispensing, which consequentlyhas reduced competition among themselves.
The price-fixing scandal has been uncovered by the Namibia Competition Commission involving close to 180 pharmacies in Namibia.
As a result, the Commission’s investigation has led to pecuniary penalties handed to five pharmacies around the country for engaging in price-fixing activities that contravened the Competition Act.
In a statement released last week,the Commission indicated that a N$250 000 settlement amount was imposed on the five pharmacies.
The commission explained that its investigation found that the Pharmaceutical Society of Namibia (PSN) and close to 180 pharmacies contravened the Namibian Competition Act, No.2 of 2003, through price fixing.
The pharmaceutical companies’ cases are currently before the High Court of Namibia for litigation.
After an extensive investigative process, including stakeholder conferences which allow for concerned parties as well as interested parties to make the necessary representations regarding the allegations, the Commission resolved that the concerned parties contravened Section 23(1) read with Sections 23(2)(b), 23(3)(e) and 23(3)(f) of the Competition Act.
Some of the pharmacies that were penalised for collusion in the price-fixing scandal are Beulah Pharmacy cc, CeCe Otjo Pharmacy CC, Chrismed Pharmacy, JN Hyper Pharmacy CC, and Medimart Pharmacy.
In terms of Section 40 of the Namibian Competition Act, No. 2 of 2003, the commission is mandated to enter into settlement agreements with the undertakings concerned.
Setting out the terms to be submitted by the Commission by application to the High Court of Namibia for confirmation as an order of the Court.
After the Commission’s investigation found that CeCe Otjo Pharmacy contravened the Act by fixing prices by imposing a 50% mark-up on the dispensing of medicine through its professional association with other members.
The company entered into a consent agreement with the Commission on 16 December 2022.
CeCe Otjo has agreed to pay a total settlement amount of N$85 000 comprising a pecuniary penalty of N$59 500 and an additional amount of N$25 500 for purposes of covering part of the Commission’s costs arising from its investigation.
As for Medimart Pharmacy, the Commission’s investigation into allegations of price fixing has been found in contravention of the Act for fixing prices through imposing a 50% mark-up on the dispensing of medicine through its professional association with other members.
The company admitted to unintended contravention of Section 23 of the Act and entered into a consent agreement with the Commission on 16 December 2022.
Medimart agreed to pay a total settlement amount of N$65 000 which comprises a pecuniary penalty of N$45 500; and an additional amount of N$19 500 for purposes of covering part of the Commission’s costs arising from its Investigation.
JN Hyper Pharmacy CC was found to have engaged in fixing prices through the imposition of a 50% markup on the dispensing of medicine through its professional association with other members.
The company has also admitted that its conduct constitutes an unintended contravention of Section 23 of the Act and entered into a consent agreement with the Commission on 21 November 2022.
It agreed to pay a total settlement amount of N$60 000 comprising a pecuniary penalty of N$42 000; and an additional amount of N$18 000 for purposes of covering part of the Commission’s costs arising from its Investigation.
Beulah Pharmacy CC was also found to have colluded and been involved in price fixing and it entered into a consent agreement with the Commission On 06 December 2022.
It agreed to pay a total settlement amount of N$40 000 comprising a pecuniary penalty of N$30 000; and an additional amount of N$10 000 for purposes of covering part of the Commission’s costs arising from its investigation.
Beulah Pharmacy will pay the settlement in six instalments of N$ 6 666.67 every four months on or before the last day of each succeeding the fourth month.
The Commission’s investigation into Chrismed Pharmacy’s alleged anti-competitive conduct found that the company had engaged in price fixing through the imposition of a 50% mark-up on the dispensing of medicine through its professional association with other members.
It admitted that its conduct constitutes an unintended contravention of Section 23 of the Act and entered into a consent agreement with the Commission on 18 January 2023.
The company agreed to pay a total settlement amount of N$15 000 comprising a pecuniary penalty of N$10 500; and an additional amount of N$4 500 for purposes of covering part of the Commission’s costs arising from its investigation.
The payment of the above amounts shall be made in 24 monthly instalments on or before the last day of each month.
The Commission indicated that it appreciates the fact that parties made use of the opportunity provided to them in terms of Section 40 of the Competition Act and resort to an amicable resolution to investigations against them.
Furthermore, the Commission encourages parties that are interested in exploring this opportunity to approach it for possible resolution in order to avoid costly litigations.
Email: erastus@thevillager.com.na