Cheater Adcock still in play
May 12, 2008
By SLINDILE KHANYILE
Durban - Despite admitting to cheating the government for 14 years in tenders, Adcock Ingram Critical Care, the second-largest drug manufacturer in the country, is still in the running for a R5 billion antiretroviral tender and will still be considered for future bids.
An insider in the department of health said it would be impossible to blacklist Adcock from future tender bids as it was a reputable drug supplier, and a ban could result in capacity constraints. However, the source said there was the possibility of legal action for damages caused by overcharging.
On Friday Tiger Brands, the parent company of Adcock, said the allegations made by the competition commission against the pharmaceutical subsidiary regarding collusive tendering and market allocation were substantially correct.
The company is to pay R53.5 million, amounting to 8 percent of its revenue. The admission followed an investigation by law firm Edward Nathan Sonnenbergs, conducted at the request of the Tiger Brands board after the allegations were revealed.
The insider said that if the department found that the difference between the fine and the amount accumulated by Adcock as a result of price-fixing was substantial, then it would institute legal action to recover that money.
Sibane Mngadi, the health department spokesperson, said on Friday that it would study the admission before commenting.
Jonathan Louw, the managing director of Adcock, confirmed on Friday that it had made a submission for the tender that was advertised three months ago. The tender would be rolled out over three years and was aimed at boosting domestic drug production.
In February, the commission said it had referred to the competition tribunal a case against Adcock, Dismed Criticare and Thusanong Health for prosecution, as it had evidence that they had colluded to fix pharmaceutical prices and rig bids.
A fourth firm also involved in the cartel, Fresenius Kabi South Africa, had co-operated with the commission from the start and had been granted immunity from prosecution.
The investigations began in 2005 and related to tenders from 1993 to last year.
The probe focused only on the large volume of parenterals and irrigation solutions used to feed critically injured patients who cannot feed themselves. The companies supplied both the public and private sector.
The organisations supplied at least 17 million units a year and inflated the prices by R4 a unit. The commission found that the conduct of the companies was detrimental to their consumers, because it resulted in public hospitals paying significantly higher prices for the products they purchased.
Thulani Kunene, the manager for enforcements and exemptions at the commission, said the cases against Dismed and Thusanong might be settled soon.
He added that the commission was still engaging the parties and was hoping to make an announcement soon.
In November, Tiger Brands was fined R98.8 million for colluding with other companies in the baking industry, which was alleged to have led to increased bread prices.
Kunene said this was not taken into consideration because even though Adcock was Tiger's subsidiary, it was a separate legal entity with a separate board.
Adcock was unbundled from Tiger last year. It was expected to list on its own in March, but that move was postponed after the emergence of the collusion allegations.
The company has said it expected the listing to go ahead before the end of September.
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