CMA accuses four pharmas of anticompetitive behaviour

Four pharma companies stand accused in the UK of colluding to artificially inflate the price of prescription-only, anti-nausea and dizziness drug prochlorperazine, costing the NHS millions of pounds and breaking competition law.

In a statement of objections, the UK's the Competition and Markets Authority (CMA) alleges that, between June 2013 and July 2018, Alliance, Focus, Lexon and Medreich agreed not to compete for the supply of prescription-only prochlorperazine 3mg dissolvable or "buccal" tablets to the NHS.

Between December 2013 and December 2017, the prices paid by the NHS for the drug rose by around 700% from £6.49 per pack of 50 tablets to £51.68, it said, further noting that from 2014 to 2018, the annual costs incurred by the NHS for prochlorperazine increased from around £2.7 million to around £7.5 million, even though the number of packs dispensed fell.

The watchdog 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 finds that Alliance, Focus, Lexon and Medreich entered into an overarching agreement that was implemented through two separate agreements – one between Alliance and Focus, and one between Focus, Lexon and Medreich. Under these alleged agreements Alliance supplied prochlorperazine exclusively to Focus. Focus then paid Lexon a share of the profits it earned on the onward sales of Alliance’s Prochlorperazine. Lexon, in turn, shared these payments with Medreich.

In its provisional findings the CMA alleges that, before entering into this arrangement, Lexon and Medreich had been taking steps to launch their jointly developed prochlorperazine. Although Medreich obtained a licence to supply the drug back in January 2014, it did not actually supply the product until November 2017.

"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," said Ann Pope, CMA senior director of Antitrust.

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

However, Alliance told the media that "it has had no involvement in the pricing or distribution of prochlorperazine since 2013, when it was out-licensed by the company to Focus Pharmaceuticals Limited on an exclusive basis as is normal market practice. Alliance has not had control of or influence on, and nor has it benefited from, any price increases."

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