ACCC finalises investigation into GlaxoSmithKline’s pricing claims

10 October 2016

The Australian Competition and Consumer Commission has concluded its investigation into whether GlaxoSmithKline (GSK) made misleading statements about a price increase of its Panadol Osteo products.

The ACCC investigated concerns that GSK had made statements that linked a price increase of Panadol Osteo to the delisting of the product from the Pharmaceutical Benefits Scheme.

The ACCC investigated whether these statements were false, misleading or deceptive and found the evidence available is unlikely to establish a contravention of the Australian Consumer Law. However, the ACCC had some significant concerns about the ambiguity of GSK’s statement.

In December 2015 GSK sent a letter to pharmaceutical wholesalers stating:

The Government recently confirmed most OTC [Over The Counter] medicines, including Panadol Osteo, will no longer be available on the PBS from 1st January, 2016.

In moving to an OTC business model, GlaxoSmithKline is no longer able to sustain its current pricing of Panadol Osteo. As such, there will be a price increase on Panadol Osteo from 1st January 2016.

GSK also sent a letter to pharmacists making similar representations.

“GSK’s statements about the increase in price of Panadol Osteo did not make clear the reasons for it, leaving open to interpretation whether the delisting of the product from the PBS contributed to the price increase and to what extent,” ACCC Chairman Rod Sims said. 

“There can be a fine line between an ambiguous statement and a misleading one.”

“Where price increases are attributable to a number of factors, businesses need to be careful in linking one factor, such as a change to Government policy, to an increase in prices so as not to mislead consumers,” Mr Sims said.

The ACCC found that the delisting from the Pharmaceutical Benefits Scheme resulted in some modest indirect costs to GSK, but was only one of a number of reasons for the price increase. Other contributing factors included the entrance into the market of generic paracetamol 665mg products and the effect this had on sales of Panadol Osteo.

There were no direct regulatory costs to GSK arising from the delisting of Panadol Osteo from the Pharmaceutical Benefits Scheme.

Background

On 2 November 2015, the Government announced from 1 January 2016 it would be removing a number of medicines from the Pharmaceutical Benefits Scheme that were also available over-the-counter, where those medicines cost less than the standard co-payment amount, including paracetamol products.

On December 30 2015, the Minister for Health outlined concerns about the representations made by GSK and asked the Department of Health to alert the ACCC to this issue.

 

Release number: 
MR 184/16
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