Following a Competition and Markets Authority (CMA) investigation, four companies have been issued with fines totalling over £35 million for entering into illegal agreements which enabled a 700% increase in the price paid by the National Health Service (NHS) for prochlorperazine.
The CMA found that, from June 2013 to July 2018, Alliance Pharmaceuticals, Focus (now owned by Advanz, previously owned by Cinven) and Lexon were involved in an agreement that restricted competition in the supply of prochlorperazine 3mg buccal tablets to the NHS. A fourth company, Medreich, was involved in the arrangement between February 2014 and February 2018.
According to the CMA, under the arrangement, “Alliance Pharmaceuticals appointed Focus as its distributor, and Lexon and Medreich were paid a share of the profits that Focus earned by selling Alliance’s product. In return, Lexon and Medreich agreed not to compete in the supply of these prochlorperazine tablets in the UK”.
Notably, the CMA also found that, before entering into the agreement, Lexon and Medreich had prepared to launch their own jointly-developed version of prochlorperazine. “Although Medreich first obtained a licence to supply prochlorperazine in January 2014, it did not supply commercial volumes of the product during the period of the infringement”.
The actions of the companies meant that from December 2013 to December 2017, the price paid by the NHS for prochlorperazine increased by 700%. “Consequently, between 2014 and 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”, states the CMA.
The fines are imposed as follows:
- £7.9 million fine for Alliance Pharmaceuticals
- £7.3 million fine for Lexon
- £4.6 million fine for Medreich
- £15.5 million fine for Focus, split between Advanz and Cinven.
The CMA notes that Medreich’s fine was reduced by 40% in return for admitting its involvement in the infringement and cooperating with the CMA’s investigation.
Commenting, Andrea Coscelli, Chief Executive of the CMA said, “The size of the fines reflects the seriousness of this breach. These firms conspired to stifle competition in the supply of this important medication, so that the NHS – the main buyer of the drugs – lost the opportunity for increased choice and lower prices. While the arrangement was in place, the price increased significantly for a drug that people rely on to manage debilitating nausea, dizziness and migraines.
All firms should know that we will not hesitate to take action like this against any businesses that collude at the expense of the NHS”.
Alliance and Advanz have voiced their intention to appeal the ruling.