The President of the Office of Competition and Consumer Protection considered an anticompetitive practice the agreements concluded by Johnson &  Johnson Poland with two pharmaceutical wholesalers: Compol and Hurtofarm, that restricted the sale of medicines based on erythropoietin and setting sales prices. Cezary Banasiński imposed fines on the company for a total amount of almost 3.8 million zloty

Both decisions - recognising the agreements concluded by Johnson & Johnson Poland with pharmaceutical wholesalers Compol and Hurtofarm as competition restricting practices - are the first effects of investigations by UOKiK concerning the market of drugs containing human recombined erythropoietin (EPO). The pharmaceuticals are used by hospitals, clinics and dialysis stations to treat anaemia.

In the Polish market, EPO is marketed as Eprex (offered by Johnson &  Johnson) and NeoRecormon (sold by Roche Polska). Since they are not subject to regulations concerning refunds, their price is a market price determined by pharmaceutical companies and their distributors (wholesalers).

The first decision of the President of UOKiK concerns provisions in an agreement between Johnson &  Johnson Poland and Compol engaged in wholesale distribution of pharmaceuticals. It describes the principles applying to the distribution of Eprex. In accordance with the principles, the wholesaler is to buy the medicine from Johnson &  Johnson Poland and offer it to the buyers (dialysis stations) at tenders at prices agreed with the producer. In the opinion of the Office, the provision is an example of unlawful imposing of sales prices on distributors and has to be considered as a competition restricting practice. Another example in the opinion of UOKiK of an unlawful practice is the provision in the distribution agreement designating to Compol the list of buyers of Eprex in the form of specific 18 dialysis stations. In the opinion of the Office, that was an unlawful agreement restricting the wholesaler’s market and enabling Johnson &  Johnson to control it and form it unlawfully.

The other decision of the President of the Office concerned agreements between Johnson &  Johnson Poland and Hurtofarm. In annexes to the General Sales Terms concerning the principles of Eprex distribution, the parties agreed that would not offer the medicine to hospitals listed in the document. Besides, Hurtofarm undertook to refrain from selling Eprex to 11 clinics to be opened next year. Those hospitals and dialysis centres were to be supplied by Johnson &  Johnson  Poland on their own, or by a distributor designated by it. The sanction provided for failure to observe those provisions was non-payment of the contractual bonus, which as a matter of fact was the only remuneration for the wholesaler for the sale of Eprex. Considering the above, UOKiK discovered the existence of an illegal agreement to control and restrict by Johnson &  Johnson of a market for Eprex for Hurtofarm. This is a legally prohibited practice restricting competition.

The President of the Office in both decisions ordered the discontinuation of the questioned practices and imposed fines on the enterprises: on Johnson &  Johnson Poland, totally almost 3.8 million zloty (1 650 950 zloty and 2 122 650 zloty respectively), on Hurtofarm 117 925 zloty and on Compol 33 019 zloty. The difference in the penalties is primarily due to the extent of guilt - drug distributors are at a disadvantage, when negotiating terms and conditions of agreements.

By ordering discontinuation of those practices and imposing the fines, the President of the Office had in view the negative market effects threatening competition resulting from such agreements. In effect, the freedom of distributors (pharmaceutical wholesalers) was in such important sphere of their business as setting the price of Eprex and designating a list of entities to which they can sell the medicine. The restrictions gave Johnson & Johnson Poland a possibility to control the sale of this drug.  It is also important, that the agreements are harmful to buyers of the erythropoietin drugs, i.e. hospitals and dialysis stations. Pre-determined sales prices make it impossible to lower the prices which is obviously against the economic interest of those entities. Also, the designation of the list of buyers to whom the wholesalers may not sell the product, produces a situation when potential buyers are forced to select the product from among a smaller number of offers.

The Branch of UOKiK in Warsaw (acting on behalf of the President of the Office) continues two more antimonopoly investigations related to the EPO market - on agreement by Roche Polska and Johnson &  Johnson Poland of offers submitted in tenders organised by public health care entities and an illegal vertical agreement between Roche Polska and Hand-Prod. Evidence is being collected at present.

Additional information:
Elżbieta Anders, Spokesperson of UOKiK
International Relations and Communication Department
Office of Competition and Consumer Protection
Pl. Powstańców Warszawy 1, 00-950 Warsaw
Ph.: (+48 22) 827 28 92, 55 60 106, 55 60 314
E-mail: [SCODE]ZWFuZGVyc0B1b2tpay5nb3YucGw=[ECODE]