QIPP, Efficiency & Savings

24.05.19

Pharmaceutical firms accused of illegally colluding to drive up drug prices, ‘costing the NHS millions’

Four pharmaceutical firms have been accused of illegally colluding to restrict the supply of an anti-nausea tablet, drastically driving up prices by 700%, the competition watchdog has alleged.

Between December 2013 and December 2017, the cost of Prochlorperazine, also known as “buccal” tablets, rose from £6.49 per pack to £51.68 after the drug companies agreed not to compete for the supply of the prescription-only drug.

The Competitions and Markets Authority (CMA) said it had provisionally found that Alliance Pharmaceuticals, Focus, Lexon and Medreich entered into an overarching agreement through two separate agreements.

Under these alleged agreements, Alliance supplied the drug exclusively to Focus, who then paid Lexon a share of the profits it earned on the onward sales of Alliance’s drugs. Lexon, in turn, allegedly shared these payments with Medreich.

The CMA alleges each of the agreements individually broke competition law, and the resulting price hike has lost the NHS millions, as costs rose from £2.7m to £7.5m between 2013 and 2018 despite the NHS dispensing fewer packs.

Ann Pope, CMA senior director of antitrust, said: “Agreements where a company pays a rival not to enter the market can lead to higher prices and deprive the NHS of huge savings that often result from competition between drug suppliers.

“The NHS should not be denied the opportunity of benefitting from an increased choice of suppliers, or lower prices, for important medicine.”

This is CMA’s provisional findings, and the companies now have the chance to respond before a final decision is made, with the watchdog capable of imposing a 10% financial penalty.

Alliance Pharmaceuticals has denied the allegations, stating it had: “no involvement in the pricing or distribution of Prochlorperazine since 2013, when it was out-licensed by the company to Focus Pharmaceuticals on an exclusive basis, as is normal market practice.”

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