Pharmaceutical company accused of overcharging NHS
The CMA has provisionally found that Actavis UK has broken competition law by charging excessive prices to the NHS for hydrocortisone tablets.
The pharmaceutical company Actavis UK (formerly Auden Mckenzie) has increased the price of 10mg hydrocortisone tablets by over 12,000% compared to the branded version of the drug which was sold by a different company prior to April 2008. For example, the amount the NHS was charged for 10mg packs of the drug rose from £0.70 in April 2008 to £88.00 per pack by March 2016.
The company also increased the price of 20mg hydrocortisone tablets by nearly 9,500% compared to the previous branded price, equating to charges to the NHS of £102.74 per pack by March 2016, when it had previously paid £1.07 for the branded drug. De-branded (genericised) drugs are not subject to price regulation.
In a statement of objections issued to the company today, the CMA has alleged that in doing so it broke competition law by charging excessive and unfair prices in the UK for the tablets.
Hydrocortisone tablets are used as the primary replacement therapy for people whose adrenal glands do not produce sufficient amounts of natural steroid hormones (adrenal insufficiency), as for example with Addison’s disease. The condition is life threatening. Approximately 943,000 packs were dispensed for hydrocortisone tablets in the UK in 2015.
Prior to April 2008, the NHS spent approximately £522,000 a year on hydrocortisone tablets. By 2015, NHS spend on the tablets had risen to £70 million 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.
The CMA’s findings are provisional and no conclusion should be drawn at this stage that there has in fact been any breach of competition law. The CMA will carefully consider any representations of the parties under investigation before determining whether the law has been infringed.
The CMA has 3 other ongoing investigations into the pharmaceutical sector. Last week, the CMA fined the pharmaceutical suppliers Pfizer and Flynn Pharma a total of nearly £90 million for charging excessive prices for the anti-epilepsy drug phenytoin sodium, after that drug was also de-branded. In February this year the CMA fined a number of pharmaceutical companies a total of £45 million for anti-competitive agreements and conduct in relation to the supply of the anti-depressant drug paroxetine.
The CMA opened this investigation in March this year. For more information see the case page.
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and certain consumer law.
- The Chapter II prohibition of the Competition Act 1998 prohibits the abuse of a dominant position by one or more companies which may affect trade within the UK or a part of it. Similarly, Article 102 of the Treaty on the Functioning of the European Union (TFEU) prohibits the abuse of a dominant position which may affect trade between EU member states.
- The CMA may impose a financial penalty on any business found to have infringed each of these provisions of up to 10% of its annual worldwide group turnover. In calculating financial penalties, the CMA takes into account a number of factors including seriousness of the infringement(s), turnover in the relevant market and any mitigating and/or aggravating factors.
- A statement of objections gives parties notice of a proposed infringement decision under the competition law prohibitions in the Competition Act 1998 or the TFEU. It is a provisional decision only and does not necessarily lead to an infringement decision. Parties have the opportunity to make written and oral representations on the matters set out in the statement of objections. Any such representations will be considered by the CMA before any final decision is made. The final decision will be taken by a case decision group, which is separate from the case investigation team and was not involved in the decision to issue the statement of objections.
- The statement(s) of objections will not be published. However, any person who wishes to comment on the CMA’s provisional findings, and who is in a position materially to assist the CMA in testing its factual, legal or economic arguments, may request a non-confidential version of the statement of objections by contacting the CMA.
- Hydrocortisone tablets are sold in 2 different strengths in the UK – 10mg and 20mg. This statement of objections concerns the price that Actavis UK charged for each of these strengths.
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The CMA proposes to find that the undertaking referred to in this press notice as ‘Actavis UK’ consists of the following legal entities: * From June 2008 until 31 October 2012: * Auden Mckenzie (Pharma Division) Limited; * From 1 November 2012 until 28 May 2015: * Auden Mckenzie (Pharma Division) Limited; and * Auden Mckenzie Holdings Limited; * From 29 May 2015 until 24 June 2016: * Auden Mckenzie (Pharma Division) Limited; * Auden Mckenzie Holdings Limited; * Actavis UK Limited; and * Allergan plc.
- Out of those entities, the statement of objections is addressed to Actavis UK Limited, because the CMA provisionally considers it was the economic successor of Auden Mckenzie and should therefore be held liable for Auden Mckenzie’s direct involvement in the alleged infringements since 2008. Actavis UK was also directly involved in the alleged infringements since 2015. The statement of objections is additionally addressed to Allergan plc which the CMA provisionally considers is jointly and severally liable as the ultimate parent company of Actavis UK Limited for its suspected conduct in the market from 29 May 2015 to 1 August 2016, and formed part of the Actavis UK undertaking during that period.
- All information relating to this case can be found on the CMA case page.
- For more information on the CMA see our homepage or follow us on Twitter @CMAgovuk, Flickr and LinkedIn and like our Facebook page. Sign up to our email alerts to receive updates on Competition Act 1998 and cartels cases.
- Enquiries should be directed to Rory Taylor ([email protected], 020 3738 6798).