AstraZeneca and Alvogen were found guilty of conspiring to make a low-cost prostate and breast cancer medication. The medication would have been a generic form of AstraZeneca’s popular cancer treatment drug Zoladex. Due to this agreement, both companies would be fined $1.81 million in the form of penalties. Correction orders from the Fair-Trade Commission (FTC) were sent to the regional and corporate offices of AstraZeneca and Alvogen. AstraZeneca would be fined 43% or $790,000 of the total penalty while Alvogen would have to pay 57% or $1.02 million.
AstraZeneca Representative released a statement via email stating:
“The company at that time was working within the laws and regulations but respects the decision taken by the FTC. The company will always be of assistance during the investigation process”.
The News agency Yonhap reported that Alvogen delayed the launch of three AstraZeneca drugs on purpose in return for distributing their generic form of Zoladex.
Through a thorough investigation, AstraZeneca came to know that Alvogen Korea has been planning the development of a cheaper version of Zoladex for 7 years. The basic idea was to maintain the reputation of Zoladex in the market and its price decrease. AstraZeneca was under the impression that this partnership would lower the risk as Alvogen would honor the deal and not launch the in-house form of Zoladex. If the agreement between the two companies had been successfully executed, both companies would have generated combined sales revenue of US $56 million.
According to the FTC, the price of the AstraZeneca drug would have been reduced by 30%, had Alvogen launched its version. This would have benefited the cancer patients in Korea and its Health insurance service.
The pricing of the Alvogen version would be 60% of Zoladex while the price of the original drug would be 70%, once the generic version is made available in Korea. If more competition of cheaper versions of the drug enters the market, then the percentage would be further reduced to 54%
The cost of various different drugs was as follows:
· Casadox: 4300 won or $3
· Zoladex Depot: $146
· Arimidex: $1.95
· Zoladex LA Depot: $397
According to FTC sources, AstraZeneca knew this agreement would have consequences that would lead to a lack of trust. Alvogen wanted the support of AstraZeneca to make its name in the market instead of solely introducing the medication to compete in this highly competitive market. Alvogen wanted this agreement to take place at any cost as per the statement from Alvogen’s representative. Alvogen was spreading the news within their company that their drug has negatively affected AstraZeneca in most parts of Europe, which is why the former pulled their drug from Poland. Alvogen initially decided to launch their drug in 2019 but when their agreement with AstraZeneca came into place, they delayed the launch.
A senior representative of FTC stated:
“These types of partnerships are strictly forbidden which has led to lower market competition. We aim to reduce the prices of drugs for the general public as well as lower the burden of health insurance”.