Egypt’s Competition Authority is set to issue a cease and desist order against a drug distributor that unlawfully limited supplies of a key IVF medication, marking the first time it has challenged such an infringement in the pharmaceutical sector.
The ECA has issued a violation decision against a leading pharmaceutical distributor under the Egyptian Competition Law No. 3 of 2005 (ECL). The infringement involved abuse of dominant position in the distribution of a critical medication used in IVF procedures and listed under the “Red Label” by the Egyptian Drug Authority (EDA) due to its limited availability in the local market.
The company, acting as the main importer and distributor of this medication in Egypt, restricted distribution by prioritizing and self-preferencing its own pharmacy chain and denying supply to other competing pharmacies in the downstream market. Evidence revealed the distributor has engaged in various practices such as fake sales transactions, aggravating shortages of the medication, leading to artificial price inflations in the informal market. This led prices to increase by more than 35% above official prices (that are determined by the EDA). The excessive shortages led some pharmacies to purchase from the company’s own pharmacies chain to meet their patients’ needs.
These practices harmed competition among pharmacies and directly impacted patients, depriving them of access to essential treatment at regulated prices.
Key takeaways
A number of takeaways can be noted from the above decision, including the following:
- ECA’s Commitment: This decision highlights the ECA’s firm commitment in tackling anticompetitive practices in strategic markets such as healthcare in Egypt.
- The ECA used the EDA’s classification of the medication in the Red Lable (indicating shortages in this medication) as evidence in proving the abusive practice.
- This is not the first time there has been a violation decision issued by the ECA based on cooperation between the ECA and the EDA and the Ministry of Health.
- Compliance Reminder: Companies operating in sensitive sectors must ensure distribution practices comply with the ECL to avoid severe penalties.
Source: GCR, Baker McKenzie
