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Appeal Court Says Astrazeneca Must Comply With Comcom Inquiry

Fuseworks Media
Fuseworks Media

Wellington, Nov 11 NZPA - The Court of Appeal has dismissed an appeal by AstraZeneca that it did not have to provide information to a Commerce Commission inquiry into the supply of a life-saving cardiovascular drug.

Last year, government drug-buyer Pharmac was in dispute with AstraZeneca when it threatened to stop supplying injectable Betaloc IV unless it was awarded a new contract to continue providing the tablet form of the drug, Betaloc CR.

Betaloc is used as an injection to revive people who have had a heart attack, and in tablet form for less acute heart patients.

AstraZeneca's patent for Betaloc CR was about to expire, and Pharmac wanted to secure the supply of a cheaper generic beta-blocker.

Pharmac declined AstraZeneca's proposal to supply Betaloc CR and a number of other products, but not Betaloc IV.

In May 2007, AstraZeneca said it would withdraw supply of Betaloc IV, saying the quantities were not commercial.

Pharmac's options were limited, but it negotiated supply of a similar product from Novartis. Following the deal, AstraZeneca resumed supply of Betaloc IV on a month-by-month basis.

The commission decided to investigate whether AstraZeneca had an advantage over the market for intravenous injection beta-blockers and used that power to prevent the sales of generic beta-blockers, which would have breached the Commerce Act 1986.

The commission issued a demand for information from AstraZeneca under section 98 of the Commerce Act, citing section 36 of the Act which deals with taking advantage of market power.

AstraZeneca had sought a review of the decision, arguing that the commission did not have the power to issue the notice, regardless of the facts, because the drug company had an exemption from Part 2 of the Commerce Act, of which section 36 is part.

Pharmac itself, and anyone who deals with Pharmac, is exempt from Part 2 of the Act.

Pharmac is able to enter agreements with suppliers to tie the markets and prices, via subsidies, for different products together, exercising its power in one market to restrict entry or competition in another.

Pharmac's protection is provided by section 53 of the NZ Public Health and Disability Act. AstraZeneca had argued that, as it was negotiating with Pharmac, it was covered by section 53.

The High Court had ruled that the commission's investigation could continue, as it was premature to decide whether the exemption under the Commerce Act applied, and the exemption was limited.

The Court of Appeal upheld the High Court decision in a majority ruling that the commission should be able to continue its investigation to ascertain the facts.

AstraZeneca was ordered to pay Pharmac and the commission costs.

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