Drugs firm faces competition allegations

24 February 2010

24 February 2010 | Jake Kanter

Household goods group Reckitt Benckiser (RB) has been accused of abusing its dominant market position in the supply of heartburn medicine to the UK health service. 

A statement of objections issued by the Office of Fair Trading (OFT) yesterday alleged that RB sought to restrict competition with its Gaviscon brand on the NHS prescription system. The OFT said the case raised serious issues about the way drugs are supplied to the NHS. 

In response, RB, which also makes Clearasil and Nurofen, said it acted within the “letter and spirit of the law”.

Doctors use the prescription system to search for well-known branded products and where available, provide patients with an “open” prescription that lists the generic name. Pharmacies can then choose whether to dispense the brand or generic equivalent, which creates strong price competition between pharmaceutical suppliers.

The OFT has accused RB of delisting packs of Gaviscon Original Liquid just as it was assigned a generic name. It means doctors would only have found Gaviscon Advance Liquid on the system, which is patent-protected and therefore has no rival products.

No assumption should be made at this stage, the OFT added, that there has been an infringement of competition law. It will review RB’s response before determining whether the rules have been broken. If there has been a breach, it could be fined up to 10 per cent of its worldwide turnover, which stood at £7.75 billion last year. 

“This case raises significant and complex competition issues relating to the supply of prescription drugs to the NHS,” said Simon Williams, senior director for goods at the OFT.

RB said in a statement: “RB believes it competes fairly and within the letter and spirit of the law in all of our operations, and has co-operated fully with the OFT throughout its inquiry. RB will now review the OFT statement and respond accordingly.”

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