Precedential Enforcement Action

for Excessive Pricing

In a first of its kind, the Israel Competition Authority has commenced enforcement action for excessive pricing by a monopolistic firm. This week, on November 23, 2021, the Israel Competition Authority initiated hearing procedures against MBI Pharma Ltd. and two of its officers regarding its intent to impose fines on the Company and each of those officers. The action comes in light of the Competition Authority's position that MBI set an excessive price for its drug "Lidiant" – a life-saving drug for patients with cerebrotendinous xanthomatosis (CTX).

The Competition Authority's investigation showed that MBI holds a monopoly in Israel over the supply of CTX drugs (a "monopoly holder" is the Israeli legal equivalent to a "dominant firm" under European competition law). CTX is an incurable genetic illness, with only a few hundred isolated cases around the world, approximately 50 of which are in Israel. Patients suffering from this illness are required to take a life-saving drug every day for the rest of their lives. In the past, patients took a drug called Xenbilox, which is primarily sold in Israel by MBI at a price of approximately NIS 8,000 (approximately USD 2,600) per packet. In 2017, the worldwide manufacturer halted production of Xenbilox and began selling "Lidiant," although there is no real difference between them.

In 2018, "Lidiant" was registered in Israel as a dedicated drug for the treatment of CTX, and therefore, pursuant to Ministry of Health regulations, other than certain exceptions, no other drug may be imported for treatment of the disease. Since then and up until today, the price of the drug has increased dramatically, reaching at its peak approximately NIS 50,000 (approximately USD 16,000) per packet. The price later decreased and is currently approximately NIS 32,000 (approximately USD 10,300) per packet.

 

This drug is one of the medications that has been approved by the state for inclusion in the public health services, so the cost of its purchase is paid out of the public health budget.

The Israeli Economic Competition Law has adopted Article 86 of the Treaty of Rome (currently, Article 101 of the Treaty on the Functioning of the European Union) and therefore, includes a prohibition against unfair pricing. Although class action lawsuits for excessive pricing are routinely filed in Israel, and some of these have even been certified as class actions by the courts, this is the first case of excessive pricing enforcement by the Israel Competition Authority.

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