CMA investigation into suspected anti-competitive pharmaceuticals agreements
First published by Author on January 05, 2022 in the following categories: Healthcare Industry Investigations Price Fixing Price Hikes Pricing and tagged with cma | competition law | consumer law | healthcare | investigations | Pharmaceuticals | price fixing | pricing
In late 2017, the CMA released a statement announcing that it had begun an investigation into suspected anti-competitive pharmaceuticals agreements between “various parties”.
The pharmaceutical companies under review were kept anonymous until 2019. Then, according to the CMA, they alleged that Alliance Pharmaceuticals, Focus, Lexon, and Medreich had reportedly made agreements to not compete in regard to supplying anti-nausea drug Prochlorperazine.
In January, the CMA published an update regarding their investigation, which was set to conclude in Autumn 2021. As the case approaches its end, we look back at investigation so far and assess the potential damage the anti-competitive agreements may have caused.
The CMA investigation update
Until the recent update, the CMA had been investigating two connected, but different, suspected anti-competitive pharmaceuticals agreements. One is reportedly in relation to Alliance Pharmaceuticals and Focus, and the other is between Focus, Lexon and Medreich.
The agreements are said to have worked as follows:
- Alliance Pharmaceuticals reportedly supplied Prochlorperazine exclusively to Focus;
- Focus then reportedly paid Lexon a share from any profits made on this Prochlorperazine;
- Lexon then shared profits with Medreich.
The chain of supply, sale and profits described was regarded by the CMA as breaking competition law.
Then, on 22nd January 2021, the CMA closed its investigation into the two separate agreements on “administrative grounds”, instead focusing on the alleged “overarching agreement” between all four companies. It seems that the CMA judged their former course of action to be unproductive to the overall investigation, but its purpose still stands.
The impact of suspected anti-competitive pharmaceuticals agreements
The true cost of the suspected anti-competitive pharmaceutical agreements becomes evident if we take a look at the huge sums spent by the NHS on Prochlorperazine. The CMA highlighted that “the prices paid by the NHS for Prochlorperazine rose by around 700%” between December 2013 and December 2017. This equates to “from £6.49 per pack of 50 tablets to £51.68”. As such, annual costs for Prochlorperazine reportedly incurred by the NHS consequently increased from approximately “£2.7 million to around £7.5 million” between 2014 to 2017, despite having dispensed fewer units.
If the suspected anti-competitive pharmaceutical agreements are proven, this exorbitant price could be indicative of a huge burden on the NHS; a burden possibly unethically and illegally forced upon a public organisation which was already under incredible strain even before the coronavirus pandemic. In accordance with competition law, generally speaking, no consumer, company or organisation should be denied the right to choose between different suppliers and product prices.
Breaches of competition law
Any company that breaks competition law through illegal agreements deserves to suffer the repercussions of their illicit practices. Breaches of competition law can mean that consumers and businesses get a bad deal, which is why we are determined to ensure the law is upheld.
As an expert consumer action law firm, we want to make sure consumers and businesses are allowed to buy and sell fairly. We will continue to keep a close eye on the developments in this particular case, which is always one that affects us all. When it comes to our public health service, we must ensure that it is protected and it is never being abused.
IMPORTANT: advice on this page is intended to be up-to-date for the 'first published date'.
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