8 unscrupulous pharmacies fined for unconscionable conduct in relation to COVID-19

By Duncan Mlanjira

At its extra-ordinary board meeting in Lilongwe on April 24, the Competition and Fair Trading Commission (CFTC) imposed fines to eight pharmacy shops for unconscionable conduct, specifically excessive pricing, in relation to the supply of essential protective and preventive equipment used in the management of the global COVID-19 pandemic.

Traders are charging exorbitant prices for
COVID-19 materials procured by general public

The meeting by the Board of Commissioners was convened specifically to consider and adjudicate over 16 cases of alleged unfair trading practices and found guilty eight pharmacy shops for the unconscionable conduct, specifically excessive pricing, which is against Section 43(1) (g) of the Competition and Fair Trading Act (CFTA).

In a statement, CFTA’s executive director James Kaphale said in March, the Commission received information indicating that there were some unscrupulous traders and companies that were taking advantage of the global Coronavirus pandemic to engage in unfair trading practices. 

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The practices included deceptive conduct whereby some products were being promoted or marketed as a cure for COVID-19 and yet, according to World Health Organisation, there was no medically tested and approved product which could cure the disease.

The unconscionable conduct was through excessive pricing or unjustifiable price increases and in view of this, the CFTC Secretariat issued a Public Notice on March 18 advising the public that it was an offence, under the Competition and Fair Trading Act (CFTA) and Consumer Protection Act (CPA), for any business person to engage in deceptive or unconscionable conduct. 

“The Secretariat also appealed to consumers to observe laid down health rules including washing hands and reducing unnecessary travel as ways of mitigating the spread of the Coronavirus.

“From March 20-23rd March 2020, the Secretariat carried out an inspection of pharmaceutical companies and supermarkets to check compliance with the CFTA and CPA in the marketing and supply of essential personal protective equipment and supplies used in the management of COVID-19. 

Coronavirus alert

“During the inspection, the Secretariat collected pricing information, with a view to investigating the level of price adjustment pre-COVID-19 outbreak and post COVID-19 outbreak,” Kaphale said.

He added that the merchants or pharmaceutical companies that were suspected to have unfairly increased their prices to unconscionable levels were issued with interim cease and desist orders awaiting the CFTC Board of Commissioners to hold the extraordinary meeting.

Coronavirus alert

Maula Pharmacy was fined K2 million for excessively pricing N95 face masks and was also issued a warning for failure to furnish CFTC with information as required.

“An inspection conducted on 21st March 2020 by the CFTC Secretariat showed that Maula Pharmacy Ltd in Lilongwe were charging MK3,500 for N95 face masks whose benchmark price was around MK750, representing an estimated margin of 367%. 

Coronavirus alert

“The trader was issued an interim cease and desist order, which required them to provide written justification for the price which was suspected to be excessive and an infringement of Section 43(1)(g) of the CFTA.”

Kaphale said Maula Pharmacy neither formally responded to the interim cease and desist order nor reduced their prices, as confirmed during a follow up inspection conducted on 16th April 2020.

During the inspection, the trader provided false information to the CFTC, claiming that the masks were supplied at a higher price. However, the supplier disputed the claims stating that the items were supplied to Maula Pharmacy at a price of MK750.

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Next is MaxiCare Pharmacy in Lilongwe which has been fined K2 million for excessively pricing 400ml Romeo hand sanitizers, whose benchmark price was around MK5,000 — representing an estimated margin of 190%.

The respondent neither formally responded nor reduced their prices.

A fine of K2 million was meted on Excel Pharmacy in Blantyre for excessively pricing N95 face masks at MK3,000 whose benchmark price was around MK750 representing an estimated margin of 367%. 

Coronavirus alert

Excel Pharmacy also neither formally responded to the interim cease and desist order nor reduced their prices, as confirmed during a follow up inspection conducted on April 21.

City Pharmacy, located at City Mall in Lilongwe, was charging MK12,000 for 400ml Romeo hand sanitisers whose benchmark price was around MK5,000; representing an estimated margin of 140%. 

And they were fined K750,000 and also did not formally respond to the interim cease and desist order nor reduced their prices.

Coronavirus alert

Pharmaworld Pharmacy was also fined K750,000 for excessively pricing gloves at MK120 against a benchmark price of MK46, representing an estimated margin of 160%. 

Pharmaworld Pharmacy responded in writing, enclosing supporting receipts to demonstrate that the pricing was not excessive,” says CFTC. “However, an analysis of the receipts showed that the trader was selling the gloves at MK120 against a benchmark price of MK46.

Face mask

Pharmalife Pharmacy of Lilongwe was excessively pricing 400 ml Romeo hand sanitisers, gloves and N95 facemasks and was fined K750,000.

The Commission found out that Pharmalife Pharmacy was charging MK200 per pair for gloves whose benchmark price was MK70 representing an estimate margin of 186%.

The 400ml Romeo hand sanitizers was charged at MK12,000 whose benchmark price was around MK5,000; representing an estimated margin of 140%.

Hand sanitizers

MK2,000 was for N95 facemasks whose benchmark price was MK750 representing an estimated margin of 166%.

The trader also neither formally responded to the interim cease and desist order nor reduced their prices, as confirmed during a follow up inspection conducted on 9th April.

PPEs

Lifestyle Pharmacy was fined K500,000 for excessive pricing 400 ml Romeo hand sanitizers at K10,000 whose benchmark price was around MK5,000; representing a 100% margin. 

The 8th offender was CNC Health at Gateway Mall Complex that was fined K500,000 for excessively pricing gloves MK7,500 against a benchmark price of MK3,000, representing an estimated margin of 150%.

The trader did not formally respond to the interim cease and desist order nor reduced their prices and during the follow up inspection conducted on April 20, the trader raised its prices from MK7,500 to MK8,000 representing an estimated margin of 160%.