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Big pharma fined £35m by competition regulator over NHS drug prices

·Business Reporter, Yahoo Finance UK
·3-min read
CMA fines five UK big pharma firms £35m for a 700% price increase for a drug. Photo: Mike Kemp/In Pictures via Getty Images
CMA fines five UK big pharma firms £35m for a 700% price increase for a drug. Photo: Mike Kemp/In Pictures via Getty Images

Five UK firms have been slapped with a combined £35m ($47m) fine from the competition watchdog for illegally driving up the price of an anti-nausea drug used by the NHS.

The Competitions and Markets Authority (CMA) said the price the NHS paid for prochlorperazine surged from £6.49 to £51.68 per pack of 50 tablets between 2013 and 2017.

Prochlorperazine is used to treat nausea, dizziness and migraines,

The price rise for the drug represented an increase of 700%.

Annual costs for the drug soared from around £2.7m to about £7.5m, even though the number of packs dispensed fell.

The CMA said Alliance Pharmaceuticals, Lexon, Medreich and the former and current owners of Focus broke the law by striking an illegal arrangement to limit supply of the tablets. Focus is now owned by Advanz, and was previously owned by the private equity firm Cinven.

Under the arrangement, 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.

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The fines were the result of an investigation into the conduct of several pharmaceutical firms. This includes a £7.9m fine for Alliance Pharmaceuticals; a £7.3m fine for Lexon; a £4.6m fine for Medreich; and a fine for Focus of £15.5m, apportioned between Advanz and Cinven.

Medreich’s fine would have been higher, but was reduced by 40% as a result of Medreich being granted leniency in return for admitting its involvement in the infringement and cooperating with the CMA’s investigation, the CMA said.

“The size of the fines reflects the seriousness of this breach. 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,” Andrea Coscelli, chief executive of the CMA, said.

“While the arrangement was in place, the price increased significantly for a drug that people rely on to manage debilitating nausea, dizziness and migraines.”

It comes after the CMA recently fined pharmaceutical firms more than £260m for competition law breaches, and imposed over £100m of fines for charging unfair and excessive prices for a crucial thyroid drug.

Advanz, 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 CMA in three separate investigations.

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