The competition watchdog today said it was launching a probe into four pharmaceutical companies which it said colluded to raise the price the NHS paid for a nausea treatment medicine.
The Competition and Markets Authority (CMA) said it had provisionally found that Alliance, Focus, Lexon and Medreich had agreed not to compete for the supply to the NHS of Prochlorperazine 3mg dissolvable or “buccal” tablets, an anti-nausea and dizziness medicine.
Between December 2013 and December 2017, the prices paid by the NHS for Prochlorperazine rose by around 700 per cent from £6.49 per pack of 50 tablets to £51.68.
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From 2014 to 2018, the annual costs incurred by the NHS for Prochlorperazine increased from around £2.7m to around £7.5m, even though the number of packs dispensed fell.
The CMA has provisionally found that Lexon and Medreich were paid a share of the profits earned by Focus on the supply of the Alliance product, and agreed not to compete in the UK on the supply of Prochlorperazine.
It provisionally found that Focus, Alliance and Medreich entered into an overarching agreement that was implemented through two separate agreements – one between Focus and Alliance, and one between Focus, Medreich and Lexon.
Under the agreements Alliance supplied Prochlorperazine to Focus. Focus then paid Lexon a share of the profits it earned and Lexon shared these payments with Medreich.
The CMA alleges that before this agreement Medreich and Lexon had been planning on launching their own jointly developed Prochlorperazine. Medreich received a licence to supply Prochlorperazine in January 2014, but did not supply the product until November 2017.
Ann Pope, CMA senior director of antitrust, said: “Agreements where a company pays a rival not to enter the market can lead to higher prices and deprive the NHS of huge savings that often result from competition between drug suppliers.
“The NHS should not be denied the opportunity of benefiting from an increased choice of suppliers, or lower prices, for important medicine.”
The four companies will have a chance to make representations to the CMA before it makes its final decision on whether they broke competition law.
Alliance said in a statement: “Alliance confirms that it has had no involvement in the pricing or distribution of prochlorperazine since 2013, when it was out-licensed by the company to Focus Pharmaceuticals Limited on an exclusive basis as is normal market practice. Alliance has not had control of or influence on, and nor has it benefited from, any price increases.”
Lexon and Medreich were contacted for comment. Focus could not be reached for comment.