Pharma firms conspired to fix drug price, says watchdog

3 March 2017

Two pharmaceutical firms have been accused of colluding with each other to drive up prices of a life-saving drug sold to the NHS, breaking competition law.

The UK’s Competition and Markets Authority (CMA) said preliminary findings showed that Actavis UK and Concordia fixed the market for hydrocortisone tablets, which saw the price almost double from £49 a packet to £88 between 2013 and 2016.

According to the CMA, around 943,000 packets of the tablets were distributed over the last year to treat conditions such as Addison’s disease—a long-term endocrine disorder where the adrenal glands do not produce enough steroid hormones.

The CMA has alleged that Actavis UK incentivised its rival Concordia not to enter the market with its own version of the tablets by providing Concordia with a fixed supply of Actavis-branded 10mg tablets at a reduced price, to resell on to UK customers at a pre-agreed price. 

Actavis UK, in return, would remain the sole supplier of the drug in the UK, able to charge a higher price without any competition. 

CMA senior responsible officer Andrew Groves said the CMA suspected that Actavis UK abused its position by convincing Concordia to delay its entry into the market to extend the high prices.

“We allege these agreements were intended to keep Actavis UK as the sole supplier of a drug relied on by thousands of patients—and in a position which could allow it to dictate and prolong high prices,” he said.

“Anti-competitive agreements can cost the NHS, and ultimately the taxpayer, by stopping competition bringing down the cost of lifesaving drugs like hydrocortisone tablets.”

Grove added that for now the findings were only provisional and that no conclusion should be drawn at this stage.

“We will carefully consider any representation of the companies under investigation before determining whether the law has been infringed,” he said.

Pharmaceutical firm Teva, who now holds the licence for the Actavis UK trademark after an aquisition last year, confirmed to the BBC that it was the subject of "allegations of anti-competitive conduct" but declined to comment any further. 

The new allegations come on the back of a separate investigation by the CMA in December which accused Actavis UK of overcharging the NHS for the hydrocortisone tablets by 12,000% over eight years. 

The regulator's provisional findings accused the pharmaceutical company of raising the price for 10mg tablets from 70p to £88, sending NHS spending on the medication soaring from £522,000 annually before 2008 to £70m in 2015.

Last year, drugs firms Pfizer and Flynn Pharma were fined nearly £90m by the CMA for unfair pricing to the NHS after hiking up the cost of the anti-epilepsy drug, phenytoin sodium, by up to 2,600% after the drug was debranded.

Debranded, or generic, drugs are not subject to price regulation.

Pfizer was handed a record £84.2m fine by the watchdog, while Flynn Pharma was asked to pay £5.2m for breaking competition law. Both were ordered to drop their prices.

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