Drug firm 'overcharged NHS with 12,000% price hike'

22 December 2016

Pharmaceutical company Actavis UK has been accused by the Competition and Markets Authority (CMA) of breaking competition law by charging excessive prices to the NHS. 

The CMA said in a provisional ruling that the company, formerly named Auden Mckenzie, increased the price of generic 10mg hydrocortisone tablets by over 12,000%. This was compared to the branded version of the drug, which was sold by a different company prior to April 2008.

The price rise meant that by March 2016 the NHS was paying £88 for packs of the drugs compared to 70p in April 2008.

During the same period the company increased the price of 20mg hydrocortisone tablets by nearly 9,500% compared to the previous branded price.

This equated to the NHS being charged £102.74 per pack by March 2016, when it had paid £1.07 for the branded drug in 2008.

De-branded, or generic, drugs are not subject to price regulation.

The CMA said its findings are provisional and it will consider any representations of the parties under investigation before determining whether the law has been broken.

Hydrocortisone is the primary replacement therapy for people whose adrenal glands do not produce sufficient amounts of natural steroid hormones (adrenal insufficiency). This means it is prescribed for life-threatening conditions such as Addison’s disease.

An estimated 943,000 packs of hydrocortisone tablets were dispensed in the UK in 2015.

Before April 2008 the medication cost the NHS around £522,000 a year, whereas by 2015 spending on the tablets had risen to £70m a year.

Andrew Groves, CMA senior responsible officer, said: “This is a lifesaving drug relied on by thousands of patients, which the NHS has no choice but to continue purchasing.

“We allege that the company has taken advantage of this situation and the removal of the drug from price regulation, leaving the NHS – and ultimately the taxpayer – footing the bill for the substantial price rises.”

Teva Group said it had recently acquired Actavis UK but it was in the process of divesting the company and Actavis UK “has never in practice been controlled by Teva”. Teva said it “intends to defend the allegations”.

“Although the pricing of the acquired Actavis product (hydrocortisone) under investigation was never under Teva's effective control, Teva believes that intervention by the CMA in prices for generic medicines raises serious policy concerns regarding the roles of both the CMA and the Department of Health,” said Teva in a statement.

The CMA fined the pharmaceutical suppliers Pfizer and Flynn Pharma a total of nearly £90m for charging excessive prices for the anti-epilepsy drug phenytoin sodium, after that drug was also de-branded.

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