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Pharmaceutical companies accused of breaking competition law

Posted: 16th July 2019   In: Corporate Commercial

The Competition and Markets Authority has provisionally found that four pharmaceutical companies broke the law by agreeing not to compete in the supply of an anti-nausea drug in the UK.

It alleges that, between 2013 and 2018, Alliance, Focus, Lexon and Medreich agreed not to compete for the supply of Prochlorperazine tablets to the NHS. Prochlorperazine is an important drug used to treat nausea and dizziness.

The prices paid by the NHS rose by around 700% from £6.49 per pack of 50 tablets to £51.68. From 2014 to 2018, the annual costs increased from around £2.7 million to around £7.5 million, even though the number of packs dispensed fell.

The CMA has provisionally found that Lexon and Medreich were paid a share of the profits earned by Focus on the supply of the Alliance product and agreed not to compete for the supply of Prochlorperazine in the UK.

It also provisionally found that Alliance, Focus, Lexon and Medreich entered into an overarching agreement that was implemented through two separate agreements.

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

The CMA alleges that each of the agreements individually broke competition law.

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.

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

This is the CMA’s provisional finding and the companies now have the chance to make representations to the CMA before it reaches a final decision.

Please contact Jon Alvarez if you would like more information about the issues raised in this article, or any aspect of competition law.

 

Posted by: Jon Alvarez
Corporate Commercial
Luton Office