'Drug firms' agreement cost NHS millions'

Will Green is news editor of Supply Management
4 March 2019

Costs for the NHS increased by millions of pounds because of an agreement between two drug companies that one would not enter the market for hydrocortisone tablets, according to the Competition and Markets Authority (CMA).

In provisional findings, the CMA said between 2011 and 2015 the sole supplier of hydrocortisone tablets in the UK, Auden Mckenzie, made monthly payments to rival Waymade on the basis it would not compete.

“As a result of this alleged anti-competitive behaviour, the CMA believes the NHS was denied a choice of suppliers and the potential savings resulting from increased competition,” said the CMA.

“From 2011 to 2015, while Auden Mckenzie remained the sole supplier of 20mg hydrocortisone tablets, charges to the NHS rose from around £46 to £90 for a pack of 30 tablets, increasing the annual costs incurred by the NHS for the medicine from £1.7m to £3.7m.”

The CMA said hydrocortisone was the primary treatment for people suffering with Addison’s disease and there were “limited alternatives available for patients”.

Waymade was ready to enter the market for 20mg tablets in 2011 but failed to do so until 2015. “Instead it froze its own stock and agreed a deal with Auden Mckenzie under which it received monthly payments aimed at delaying its entry as a competitor in the market,” said the CMA.

Waymade also obtained a licence to sell 10mg tablets in 2012, but in exchange for not entering the market, Auden Mckenzie lowered the price it charged Waymade for such tablets from the market rate of £32 per pack to £1.

Separately, five office fit-out firms have been fined a total of more than £7m by the CMA for “cover bidding” in competitive tenders, where companies agree bids with each other that are intended to lose the contract, thereby reducing the intensity of competition.

The cover bids affected 14 contracts with a variety of customers including a City law firm and a further education college.

The firms are Fourfront (fined £4.1m), Loop (£1.09m), Coriolis (£7,700), ThirdWay (£1.8m) and Oakley (£58,500).

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