Antimonopoly Committee of Ukraine Opens Case Against Leading Distributors
The Antimonopoly Committee of Ukraine (AMCU) announced on June 12, 2024 that it has opened a case against two leading pharmaceutical distributors in the country – BaDM LLC and Optima-Pharm – for anti-competitive practices and artificial pharmaceutical price inflation from 2019 to 2023.
Popular Over-the-Counter Medications Affected by Price Fixing Scheme
According to the AMCU statement, the two companies colluded to raise prices on popular over-the-counter medications such as Spasmalgon and Eucasolinum Aqua without the knowledge of drug manufacturers.
An analysis by AMCU experts found no objective reasons or cost increases from producers to justify the price hikes by the distributors.
“BaDM LLC and the Ukrainian-Estonian joint venture Optima-Pharm, LTD are suspected of violating Clause 1 of Article 50 and Part 3 of Article 6 of the Law of Ukraine ‘On Protection of Economic Competition’,” the AMCU stated.
The companies engaged in “coordinated artificial pricing” that exhibited similar patterns and dynamics over the four year period in question.
BaDM and Optima-Pharm: Market Leaders in Ukrainian Pharmaceutical Distribution
BaDM claims on its website to be Ukraine’s top pharmaceutical distributor, supplying “every second product on pharmacy shelves.” Along with Optima-Pharm, the two companies are considered market leaders in pharmaceutical logistics and distribution.
The two companies control a combined 86% of the pharmaceutical distribution market in Ukraine.
Dominant Market Positions of BaDM and Optima-Pharm Raise Concerns
According to the AMCU’s criteria for determining market dominance, a company with a market share exceeding 35% is considered to have a dominant position unless it can prove it faces significant competition.
Both BaDM and Optima-Pharm, the two pharmaceutical distributors accused of artificial price inflation, hold more than 40% of the Ukrainian medicine distribution market, well above the 35% threshold.
Other pharmaceutical distributors, such as Venta and Delta Medical, each have less than 5% of the market.
This substantial market share gives them the power to potentially influence prices and limit competition. As a result, the AMCU’s case against these companies is not only based on evidence of coordinated price hikes but also on their dominant market positions.
The committee will closely examine whether BaDM and Optima-Pharm have abused their market power to engage in anti-competitive practices that harm consumers and smaller market players.
Potential Consequences if Found Guilty: Fines and Damage Compensation
If found guilty of anti-competitive collusion by the AMCU, the distributors could face fines of up to 10% of their annual turnover and be forced to compensate for damages caused.
The opening of the case sends a strong signal that artificial drug price inflation will not be tolerated as Ukrainian patients struggle with rising costs and economic hardship.
The involvement of two of Ukraine’s largest pharmaceutical distributors in a multi-year price fixing scheme raises concerns about anti-competitive practices and market manipulation in the industry.
Transparent drug pricing and robust competition are essential to ensure affordable access to medications for Ukrainian citizens.
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