by Jennifer Collins
BERLIN, Jan 28 (APM) - A German competition body is prepping for a court case against pharma wholesaler AEP over the legality of its discount model in a test case that could upset the entire industry, AEP CEO Jens Graefe has said.
The Centre for Protection against Unfair Competition said it wants Germany's highest court, the Federal Court of Justice, to clarify what kinds of drug discounts are allowed in the pharma wholesale sector, and whether those offered by AEP and other wholesalers are lawful.
"The question of whether and to what extent pharmaceutical wholesalers can offer discounts has been disputed for years," said the independent business association in a December press statement.
A spokeswoman told APM it is preparing a court case against AEP after it failed to respond to its cease and desist letter in December.
Graefe argues that AEP's discount model is legal and that such discounts ('skonti' in German) - under which a company gives its customer a premium rate for certain payment benefits, such as paying before the due date in cash - are common in the wholesale and pharma industry.
"All the wholesalers give 'skonti' to their customers, all manufacturers give 'skonti' to wholesalers - this is what they are living from. You can say very roughly the 'skonti' equals the profits of the wholesalers - this is very normal - we with our 2.5% ('skonti') are absolutely normal," said Graefe.
If the alternate "view of the law would prevail, it would turn the whole industry upside down", affecting pharma companies, wholesalers and pharmacists, he said.
Newcomer AEP offers a basic discount of 3% and a further 2.5% 'skonti' for prompt payment on prescription drugs costing up to 70 euros, and a 2% plus 2.5 % discount for products over 70 euros - and its payment terms are much shorter and more transparent than those of competitors, says Graefe.
Graefe told APM that pharma wholesale industry group Phagro or one of its members, which include Alliance Healthcare, Sanacorp and Phoenix Group, was likely behind the complaint to the competition body.
While Phagro would not comment on the matter directly, it directed APM to a December article in German pharmacy publication Apotheke Adhoc, in which director Thomas Trümper denied it was behind the legal action and said it had no official position on "skonti".
However, Trümper said the development was not surprising.
"AEP provoked the warning itself. If you spray the payment terms directly on your cars, you shouldn’t wonder if the competition watchdogs takes notice," said Trümper.
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