Johnson & Johnson faces investigation for allegedly overpricing critical tuberculosis drug in South Africa

SOUTH AFRICA —Pharmaceutical giant Johnson & Johnson (J&J), headquartered in the United States, is now under scrutiny in South Africa for purportedly imposing “excessive” pricing on a vital tuberculosis medication, as revealed by the country’s antitrust regulator.

The investigation casts a shadow not only over J&J but also its Belgium-based subsidiary, Janssen Pharmaceuticals, indicating potential wrongdoing that extends beyond borders.

The South African Competition Commission, tasked with overseeing business practices, initiated this inquiry based on allegations that these companies may have resorted to exclusionary tactics and inflated pricing for the tuberculosis drug known as bedaquiline, marketed under the brand name Sirturo.

While the commission has remained tight-lipped about specific details, local health advocacy groups assert that South Africa has been bearing a staggering financial burden, paying more than double the prices of bedaquiline compared to other middle- and low-income nations.

South Africa’s urgent need for Bedaquiline

Bedaquiline, approved for use in 2012, plays a crucial role in combating drug-resistant tuberculosis—a pressing issue in South Africa, where this infectious disease ranks as the leading cause of mortality, claiming over 50,000 lives in 2021 alone.

With a staggering HIV-infected population exceeding 7 million—surpassing any other nation in the world—South Africa finds itself grappling with the interconnected challenges of HIV/AIDS and tuberculosis, as nearly one-third of deaths among those with HIV/AIDS are attributed to tuberculosis, as stated by the World Health Organization.

On a global scale, 2021 witnessed a surprising uptick in tuberculosis cases, marking a departure from the long-term decline in incidence observed in previous years, according to the WHO’s reports.

Pressure mounts on Johnson & Johnson

Johnson & Johnson has faced mounting pressure to address the pricing issue surrounding bedaquiline.

In a recent move, the company announced its intention to provide a six-month course of the drug for a single patient through the Stop TB Partnerships Global Drug Facility, pricing it at US$130.

However, the South African government, bypassing this global facility, procures bedaquiline directly from J&J and Janssen, incurring costs of approximately US$280 for a six-month course per patient, as revealed by Professor Norbert Ndjeka, head of the national department of health’s TB control and management.

A recent report on News24 indicates that South Africa has recently negotiated a new two-year deal with J&J for bedaquiline at a slightly elevated price compared to the US$280 per course.

Despite mounting concerns and media scrutiny, the Competition Commission has been reticent about divulging further information regarding the investigation, leaving many questions unanswered.

A web of controversy deepens

This investigation emerges hot on the heels of a revelation by the Health Justice Initiative, a prominent health advocacy group, which unveiled South Africa’s COVID-19 vaccine purchase contracts with several pharmaceutical companies, including J&J and the U.S.-based Pfizer.

These contracts, obtained through a freedom of information case, have raised eyebrows by exposing apparent disparities in vaccine pricing.

The Health Justice Initiative alleges that J&J charged South Africa 15% more per vaccine dose than it did the wealthier European Union.

Pfizer, on the other hand, imposed a more substantial price gap, charging South Africa over 30% more per vaccine compared to the African Union.

This, at a time when South Africa was grappling with a dire need for vaccine doses while experiencing one of the highest COVID-19 infection rates on the continent.

In a particularly contentious detail, Pfizer required an upfront payment of US$40 million from South Africa for vaccine doses, with a mere US$20 million refundable in case of non-delivery. Similarly, J&J demanded a non-refundable down payment of US$27.5 million.

As these pharmaceutical giants report record-breaking revenues, with Pfizer’s earnings reaching US$100.3 billion in 2022 and J&J raking in US$94.9 billion in sales, South Africa’s struggle for equitable access to critical medications and vaccines continues to unfold.