AstraZeneca, Alvogen sanctioned for collusion to block cheaper anticancer generic

The Fair Trade Commission (FTC) said AstraZeneca and Alvogen would face a $1.85 million fine together for reaching an unfair deal to prevent the launch of a generic version of AstraZeneca’s Zoladex (ingredient: Gosereline), a drug for breast and prostate cancer, in Korea.

The FTC imposed a correction order on five related companies, including Alvogen headquarters, Alvogen regional office, Alvogen Korea, AstraZeneca headquarters, and AstraZeneca Korea.

The five companies face a fine of 2.65 billion won ($1.85 million) in total – AstraZeneca and AstraZeneca Korea, 1.14 billion won, and Alvogen and Alvogen Korea, 1.49 billion won.

The antitrust watchdog found that the two sides signed a deal stating that Alvogen would not produce and release a related generic version of Zoladex from Oct. 2016 to Dec. 2020 in exchange for receiving exclusive distribution rights in Korea for AstraZeneca’s three anticancer drug -- Zoladex, Arimidex, and Casodex.

"AstraZeneca first made the proposal for a deal after the company became aware that Alvogen Korea had been developing a generic version of Zoladex since 2014," the FTC said. "The proposal aimed to prevent a price cut and a reduction of market share of Zoladex."

According to internal data, AstraZeneca believed that the deal would mitigate the top-line risk as Alvogen Korea would not launch a generic version of Zoladex during the contract time frame, FTC added.

The FTC also stressed if Alvogen had launched a generic version, Zoladex's price would have dropped by 30 percent, which would have benefited Korean cancer patients and the National Health Insurance Service.

In the case of reimbursed drugs in Korea, when the first generic drug is released, the original drug price is set at 70 percent, and the generic drug price is set at 59.5 percent of the original drug price.

If additional generic drugs are released, both will be lowered to 53.55 percent of the original drug price.

As of 2017, the price of Zoladex LA Depot Injection and Zoladex Depot injection cost 570,000 won and 210,000 won, respectively. The cost of Casodex and Arimidex was 4,200 won and 2,800 won.

"AstraZeneca also knew that the contract could become an issue as an internal email showed that the company knew this issue was an antitrust issue," FTC said.

The FTC stressed that Alvogen Korea also negotiated with AstraZeneca, deciding that collusion was more advantageous than competing by launching a generic drug.

"They want to block our own Gosereline (Zoladex), which is expected," Alvogen's internal email showed. "We need to trade off this point against better terms, at least for Zoladex."

Alvogen’s internal email also stated that the market release of Zoladex’ generic drugs in Central and Eastern Europe hit AstraZeneca “significantly” and that AstraZeneca was pulling Zoladex out of Poland and Bulgaria.

The FTC also found that Alvogen had initially aimed to launch a generic version of Zoladex in the third quarter of 2019, but later changed the launch schedule citing the deal with AstraZeneca.

The collusion between the two sides ended in January 2018 when the FTC launched an investigation.

The FTC estimates that AstraZeneca and Alvogen were estimated to have reaped 80 billion won in sales because of their collusion.

However, Alvogen has failed to develop a generic drug regardless of the agreement with AstraZeneca and has not been able to launch a generic drug so far.

“We made our message clear that collusion agreement, which blocked potential competitors from entering the market, was also illegal," said Yoo Seong-wook, director of market monitoring at FTC. "By correcting collusion in the pharmaceutical market, we intend to alleviate the burden of drug prices and health insurance financial burden on patients and promote competition in the pharmaceutical market."

However, Yoo stressed that the FTC would not file a complaint with the prosecution as the contract only limited the production and release of generic drugs and not the development of the drug, the fact that Alvogen ultimately failed to launch the drug, and that agreement was terminated early and both sides cooperated with the investigation.

An AstraZeneca Korea official said that the company faithfully cooperated with the FTC investigation and respected the decision.

Alvogen Korea was unavailable for comments.