There are hundreds of millions of fines in the medical field!
On May 28th, Yuanda Pharmaceutical and Wuhan Huihai were fined about 320 million yuan for monopoly agreements. This is the second billion-dollar anti-monopoly ticket issued in the medical field this year.
Just in February this year, the General Administration of Market Supervision informed Northeast Pharmaceutical that it was fined 133 million yuan for abusing its dominant position in the L-carnitine raw material drug market in China and selling raw materials at unfairly high prices.
Another huge ticket.
According to the announcement of the General Administration of Market Supervision, in November 2020, Yuanda Pharmaceutical and Wuhan Huihai were investigated for suspected monopolistic behavior. After investigation, since 2010, only Yuanda Pharmaceutical and Shanxi Zhendong Taisheng Pharmaceutical Co., Ltd. have the qualification to produce norepinephrine and epinephrine in China. Wuhan Huihai actually controls the sales of norepinephrine and epinephrine in Shanxi Zhendong Taisheng through underwriting.
After many times of communication, Wuhan Huihai and Yuanda Pharmaceutical reached an oral agreement in June 2016, stipulating that Wuhan Huihai would stop selling norepinephrine and epinephrine, and Yuanda Pharmaceutical compensated it in two ways: First, it sold norepinephrine injection and epinephrine hydrochloride injection to it at a low price, and then repurchased it at a high price; Second, related pharmaceutical companies are required to sell norepinephrine injection and epinephrine hydrochloride injection to them at low prices, and then resell them at high prices.
It is worth mentioning that Yuanda Pharmaceutical has a dominant market share of more than 50% in China’s norepinephrine bulk drug and epinephrine bulk drug.
The General Administration of Market Supervision believes that Wuhan Huihai and Yuanda Pharmaceutical reached and implemented a monopoly agreement on the sale of norepinephrine and epinephrine raw materials, which excluded and restricted the competition in the market of norepinephrine raw materials and epinephrine raw materials, and harmed the related preparation enterprises, consumers and social public interests. The General Administration of Market Supervision therefore ordered Wuhan Huihai and Yuanda Pharmaceutical to stop illegal activities, confiscate the illegal income of Wuhan Huihai by 30.9248 million yuan and impose a fine of 4.1268 million yuan; The illegal income of Yuanda Medicine was confiscated 149 million yuan, and a fine of 136 million yuan was imposed.
According to public information, Wuhan Huihai belongs to Hubei Minkang Pharmaceutical Group and is headquartered in Wuhan, Hubei Province. Its main fields include high-end chemicals, first imitation chemicals, high-end raw materials, and the development of classic Chinese medicine prescriptions, with more than 1,000 employees.
Yuanda Pharmaceutical used to be named Wuhan Yuanda Pharmaceutical Group Co., Ltd., and in 2002, it completed the change of ownership structure and was listed on the Hong Kong Stock Exchange. Yuanda Pharmaceutical is mainly engaged in manufacturing and selling pharmaceutical preparations and medical devices, biotechnology products and nutritional products, fine raw materials and other products.
It is worth noting that the data show that the actual controller of Shanxi Zhendong Taisheng Pharmaceutical Co., Ltd. is Li Anping, the actual controller of Zhendong Pharmaceutical. The legal representative of this company is Zhao Yongjun, which is 100% owned by Shanxi Zhendong Pharmaceutical and belongs to Zhendong Health Group.
In response to this punishment, on the same day, Yuanda Pharmaceutical announced that the amount of punishment imposed by the General Administration of Market Supervision accounted for about 3.48% of the Group’s revenue and 15.85% of its net profit in the last fiscal year, respectively, which is not expected to have a sustained impact on the Group’s production and operation.
The anti-monopoly mechanism of medicine has been gradually improved
Speaking of pharmaceutical anti-monopoly fines, 2021 is a year of vigorous and vigorous. At that year, the State Administration of Market Supervision issued the first fine of 100 million yuan for simcere. Later, it was a sky-high fine of 764 million yuan for Yangzijiang Pharmaceutical. The reason for the punishment was that the company reached a fixed drug resale price and a limited drug minimum resale price agreement with downstream enterprises such as drug wholesalers and retail pharmacies by signing cooperation agreements, issuing price adjustment letters and oral notices nationwide, with its 2018 sales of 25.467 billion yuan as a fine. Since then, Tianyao Co., Ltd. was fined 44.02 million yuan for monopolizing "Fluoxetine Acetate", and Nanjing Ningwei Company was fined 6.58 million yuan in 2021 for monopolizing the antidote-phosphoryl chloride.
From the above punishment, it can be seen that not only the monopoly of pharmaceutical raw materials will be punished, but also the preparation field has become a high-incidence area for monitoring and punishment. In order to ensure the interests of distributors at all levels, some enterprises monopolize prices, regions, channels and terminals by controlling sales, which leads to patients and medical insurance having to pay for high-priced drugs, and this behavior has also been included in the ranks of punishment. In addition, some enterprises, such as Sunflower Pharmaceutical, Revision Pharmaceutical, Renhe Pharmaceutical, Nanjing Tongrentang, etc., have also been included in the monitoring.
Although the fine is very heavy, in recent years, commonly used drugs, low-priced drugs and life-saving drugs are often exposed as "unavailable" or "soaring prices". Just in late April this year, on several medical platforms, hydrocortisone acetate tablets were either unavailable or the price soared tenfold. Originally, 100 tablets per bottle only sold double-digit drugs, but they were suddenly hyped in 1000 yuan. The drug is aimed at adrenocortical hypofunction. On May 29th, the reporter found on Taobao, JD.COM and other Internet medical platforms that 30 tablets/box of hydrocortisone acetate tablets can be bought on the Internet medical platform, but the price is still expensive. One box is priced at 128 yuan, and two boxes are 256 yuan, which requires a prescription to buy.
The reporter noted that since the National Development and Reform Commission investigated the first case of API monopoly in 2011 (the case of "Shandong Weifang Longshun and manipulating the market price of promethazine hydrochloride"), anti-monopoly law enforcement agencies have launched a number of API monopoly investigations. On November 15th, 2021, the Anti-monopoly Committee of the State Council issued the Anti-monopoly Guide of the State Council Anti-monopoly Committee in the field of raw materials, thus, the anti-monopoly work in the field of medicine in China opened a new chapter. In that year, a total of 3 cases of monopoly agreements in the pharmaceutical industry and 3 cases of abuse of market dominance were investigated; 6 cases of abusing administrative power to exclude or restrict competition; 26 cases of concentration of pharmaceutical industry operators were concluded, and the total amount of fines and confiscations in the above cases was 950 million yuan.
In 2022, the anti-monopoly system and mechanism were further improved. On June 24th, 2022, the 35th meeting of the 13th the National People’s Congress Standing Committee (NPCSC) voted to adopt a decision on amending the Anti-Monopoly Law, which will be implemented on August 1st, 2022. This is the first time that the Anti-Monopoly Law has been amended since its implementation in 2008. In 2023, the anti-monopoly investigation in the pharmaceutical industry became more and more severe.
Meng Yanbei, a member of the Expert Advisory Group of the State Council Anti-monopoly Committee and a professor at Renmin University of China, published a signed article on China Economic Net, saying that the investigation of Yuanda Pharmaceutical and Wuhan Huihai pharmaceutical companies shows that strengthening anti-monopoly supervision will effectively promote the sustained, standardized and healthy development of the pharmaceutical industry. The case has played its normative guiding role in the form of case statement, once again warning pharmaceutical industry operators to attach great importance to anti-monopoly compliance and establish a systematic anti-monopoly compliance mechanism.
