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Drug firms 'colluded' to overcharge NHS by up to 1,800%

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Various medicine pills in their original packaging. Photo: Yves Herman/Reuters

Three drug manufactures broke competition law by colluding to illegally boost the price of a vital drug at the expense of the NHS, the competition watchdog said on Thursday.

The UK’s Competition and Markets Authority (CMA) said South African drug company Aspen broke EU competition law by bribing two other rivals to stay out of Britain, maintaining Aspen’s monopoly on fludrocortisone acetate tablets. These tablets are used to treat Addison’s disease, a condition where the adrenal glands don’t produce enough steroids. Symptoms include lack of appetite, weakness, and poor mood. The condition affects around 8,400 people in the UK, according to the NHS.

Aspen admitted to the agreement in August and offered to pay £8m to the NHS, although it did not admit wrongdoing. It also said it was also on the hook to pay a fine of up to £2.1m if the CMA found it had broken competition law.

On Thursday, the CMA for the first time named Aspen’s alleged co-conspirators and said it believed Aspen had broken the law. It means Aspen will likely now faces a further fine of £2.1m unless it can convince the CMA otherwise.

The CMA said the alleged payments to rival firms Amilco and Tiofarma in 2016 allowed Aspen to boost the price of fludrocortisone acetate tablets by up to 1,800%. As part of the deal, Amilco received 30% of the increased prices from Aspen, the CMA alleges.

“The CMA has today provisionally found that Aspen, Amilco, and Tiofarma broke competition law by taking part in an illegal agreement which led to a significant price hike for a lifesaving drug,” Michael Grenfell, the CMA’s executive director of enforcement, said in a statement.

“The NHS should not be denied the opportunity of benefitting from an increased choice of suppliers, and so potential savings on what it spends on essential drugs.”

The price of fludrocortisone acetate tablets cost around £1.50 for a pack of 30 in early 2016, although this was in part constrained by regulation. The cost shot up to £30 per pack in late 2016 and early 2017, before settling back to around £13.60 today. While not all of the price rise is down to the anti-competitive deal, the CMA believes much of the price rise is.

“This highlights the importance of competition in making sure the NHS, and so ultimately UK taxpayers, do not pay more than they should for medicines,” Grenfell said.

The CMA on Thursday also formally accepted Aspen’s offer to pay the NHS £8m and said Amilco and Tiofarma now have an opportunity to respond to the allegations.

British-based Amilco and Dutch Tiofarma could not immediately be reached for comment by Yahoo Finance UK.

Gus Attridge, Aspen Deputy Group Chief Executive, told Yahoo Finance UK: “The CMA’s announcement today does not provide new information but is rather a confirmation of the acceptance of the £8m in commitments proposed by Aspen in August 2019.”