CMA’s investigation into the pharmaceutical industry for its steep price increase
First published by Admin on January 01, 2017 in the following categories: Latest and tagged with cma
Pharmaceutical companies are being investigated over ‘unacceptable and unethical’ price hikes.
The health department spokesman said that the Competition and Markets Authority (CMA) are carrying out five investigations into the pharmaceutical and health sector.
Steep price rises
Pharmaceutical companies have reportedly increased their prices in recent years, and it’s reported that the NHS are now paying tens of millions of pounds more than they were five years ago.
As the NHS is directly funded from general taxes, you can see why this is becoming a huge issue: not only for competition purposes, but for the interests of the general public.
CMA investigation
The State Secretary of Health, Jeremy Hunt, called for the intervention of the competition watchdog, the CMA, after the Times investigation concluded that prices in 32 drugs had risen by more than 1,000 per cent in five years. After the newspaper investigation, Mr Hunt was concerned that the pharmaceutical companies were exploiting the NHS by raising the price of medicines.
Loophole in the NHS
Pharmaceutical companies allegedly found a loophole in the system and exploited the NHS pricing rules. These rules meant that, by dropping the brand name on generic medicines, companies were free to charge the NHS however much they wanted.
Example of price rises
The Times gives examples of the price hike on some of the drugs:
- Welldorm (an insomnia drug) rose from £12.10 to £138.56 (June 2014 to June 2016).
- Gynest (a hormone replacement cream) rose from £4.67 to £24.98 (June 2014 to June 2016).
- Fusidic acid eye drops rose from £2.09 to £29.06 (May 2013 to April 2016).
- Symmetrel (treatment for Parkinson’s disease, which was debranded and sold as amantadine) rose from £5.33 to £130.99 (November 2013 to October 2015).
No competition?
AMCo, a British subsidiary of Concordia International, specialises in ‘niche generic medicines’. Unfortunately, this means that the drugs they offer face little or no competition, which could allow them to implement sharp price increases. Although Concordia had a run in with the CMA before in regards to the company’s supply of certain products in the U.K., this is the first time that the company is being investigated for anti-competitive pricing.
Branded drugs in the U.K. are heavily regulated, although the market for generic off-patent drugs is less regulated. This is due to the fact that costs are normally kept down by competition between competitors, but this doesn’t seem to be the case for AMCo, who has managed to regulate its own pricing.
Pharmaceutical sector under CMA investigation yet again…
This isn’t the first time that the CMA has investigated the pharmaceutical sector for anti-competitive practices. In February this year the competition watchdogs fined pharmaceutical giants GlaxoSmithKline £45 million for an anti-competitive agreement they had reportedly entered into. It was reported that GlaxoSmithKline made £50 million in payments to delay other companies bringing their anti-depressant drug onto the market.
Last August, the CMA fined pharmaceutical companies Pfizer and Flynn Pharma £90 million for charging ‘excessive and unfair prices’ to the NHS for phenytoin sodium capsules. It is said they breached national and EU competition laws, like the Competition Act and the TFEU.
The sharp rise in prices means that patients have less of a free (or arguably) no choice but to buy the medicines they need.