The Competition and Markets Authority (CMA) has slapped four pharmaceutical firms with an eye-watering £35m fine for an illegal arrangement in the supply of important NHS prescription anti-nausea tablets.
Following an investigation, the watchdog found that Alliance Pharmaceuticals, Focus (now Advanz and previously owned by Cinven), and Lexon were involved in an arrangement that restricted competition in the supply of prochlorperazine and buccal tablets to the NHS.
Prochlorperazine is an important drug used to treat nausea, dizziness and migraines.
Consequently, it has fined Focus £15.5m, Alliance Pharmaceuticals £7.9m, Lexon £7.3m , and Medriech £4.6m.
Medreich’s fine would have been higher, but was reduced by 40 per cent as a result of Medreich being granted leniency in return for admitting its involvement in the infringement and cooperating with the CMA’s investigation.
Avanz, Focus (Cinven), and Lexon have all previously been issued fines in previous CMA pharmaceutical investigations.
In the case of Advanz and Cinven, this is the first time that a company has been fined by the watchdog in three separate investigations.
The arrangement to restrict supplies endured for over five years between June 2013 to July 2018, while other company (Medreich) was involved in the scheme between February 2014 and February 2018.
Under the agreement, Alliance Pharmaceuticals appointed Focus as its distributor, and Lexon and Medreich were paid a share of the profits that Focus earned by selling Alliance’s product.
In return, Lexon and Medreich agreed not to compete in the supply of these prochlorperazine tablets in the UK.
Before entering into this arrangement, Lexon and Medreich had been taking steps to launch their jointly-developed version of prochlorperazine.
Although Medreich first obtained a licence to supply prochlorperazine in January 2014, it did not supply commercial volumes of the product during the period of the infringement.
From December 2013 to December 2017, the prices paid by the NHS for prochlorperazine rose by 700 per cent.
Consequently, between 2014 and 2018, the annual costs incurred by the health service for prochlorperazine increased from around £2.7m to around £7.5m , even though the number of packs dispensed fell.
Chief executive of the CMA, Andrea Coscelli argued the size of the fines reflected the seriousness of the breach.
He said: “These firms conspired to stifle competition in the supply of this important medication, so that the NHS – the main buyer of the drugs – lost the opportunity for increased choice and lower prices. While the arrangement was in place, the price increased significantly for a drug that people rely on to manage debilitating nausea, dizziness and migraines.”
Alliance Pharmaceuticals has criticised the ruling, and revealed it will appeal the decision.
A spokesperson for the company said: “Alliance fundamentally disagrees with the CMA’s finding and confirms that it did not participate in, or profit from, any market sharing arrangement and refutes any involvement in the alleged competition law infringement. Alliance will be appealing the CMA’s decision, and the proposed fine of £7.9m, at the Competition Appeal Tribunal.”
The investigation into the firms is part of the CMA’s ongoing work in the pharmaceutical sector.
Recent action includes hitting firms with a whopping £260m fine for competition law breaches, and £100m fines for charging unfair prices for a key thyroid drug.