How a pharma giant made pain sufferers spend more

Two pharma giants have been taken to the Federal Court for allegedly misleading osteoarthritis sufferers into paying 33 per cent more for a "more effective" product that offers "targeted relief", when this was not the case.

The Australian Competition and Consumer has launched court action against GSK and Novartis, accusing the pair of making misleading claims about Voltaren Osteo Gel and Voltaren Emulgel, which have the identical active and inactive ingredients.

Osteo Gel is marketed towards people with osteoarthritis and can be as much as 33 per cent more expensive than Emulgel.

The case has echoes of the Nurofen saga, which saw its maker fork out a record $6 million in penalties for falsely claiming its painkillers could treat particular types of pain.

"It's really disappointing that post-Nurofen, there is still behaviour where we have products with the same active ingredients stating two different abilities and two different remedies," said ACCC chairman Rod Sims.

"We're concerned that consumers suffer detriment both through paying more, and also in many cases buying both Osteo Gel and Emulgel, thinking they need both."

Both Osteo Gel and Emulgel contain diclofenac diethylammonium, which acts in a non-specific manner to reduce local pain and inflammation wherever it is applied.

GSK, which acquired Novartis' portfolio of Voltaren products in 2016, hit back against the claims, arguing that while the formulas were identical, Osteo Gel had an easy-to-open cap and Therapeutic Goods Administration-approved instructions for use in osteoarthritis.

A spokeswoman said GSK was struggling to understand the ACCC's concerns and had not receive clarity about the situation.

'Amazed, disappointed'

But Mr Sims said he "completely and very strongly" rejected that suggestion, and was "amazed and disappointed" by the company's statement.

When asked about the easy-to-open cap, Mr Sims said: "We reject that argument ... we don't accept it."

GSK also told Fairfax Media that it did make changes following the Nurofen case last year, introducing new Osteo Gel packaging in March 2017 that featured the line "same effective formula as Voltaren Emulgel".

But court filings reveal that GSK knew this did not meet the ACCC's expectations.

"GSK introduced the new Osteo Gel packaging into the market despite receiving a letter from the ACCC dated 22 December 2016," the document reads.

"This letter ... stated that the ACCC considered that GSK's (then) proposed packaging change for Osteo Gel remained misleading."

Nurofen fines

Mr Sims conceded the deterrence message of the Nurofen case was not as effective as hoped, and the ACCC would keep taking court action to get the message across to the industry if necessary.

Currently, the maximum penalty per breach of the consumer law is $1.1 million, but there is bipartisan support to lift this to at least $10 million.

While the legislative changes haven't yet passed parliament, Mr Sims is hoping for a "substantial" penalty.

Nurofen's marker, Reckitt Benckiser, didn't just pay $6 million - the highest corporate penalty ever awarded for misleading conduct under the Australian Consumer Law.

In August, Nurofen paid $3.5 million to settle a class action brought by Bannister Law.

Charles Bannister, principal at the firm, told Fairfax Media it will be closely following the ACCC proceedings.

"Bannister Law is investigating a potential consumer class action," he said.

Easy-to-open claims

More than two million Australians suffer from osteoarthritis, a degenerative condition affecting joints of the body, according to the Australian Bureau of Statistics.

Patient group Arthritis Australia said it was concerned about the misleading advertising, especially if it was used to support a price premium for a product which offered no additional benefit.

"The Osteo Gel packaging includes the claim that it features an easy-to-open cap. Easy-to-open packaging is important to people with arthritis who often experience reduced manual strength and dexterity, and they may be willing to pay more for this feature," said Arthritis Australia's Franca Marine.

"[We] provide a testing service to assess whether packaging is actually easy-to-open. However we have not been asked to test the Osteo Gel cap to assess whether this claim is warranted."

with Liam Cormican

This story How a pharma giant made pain sufferers spend more first appeared on The Sydney Morning Herald.