The CMA has provisionally found that 4 pharmaceutical companies broke the law by agreeing not to compete in the supply of an anti-nausea drug in the UK.
In a statement of objections issued, 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. Prochlorperazine is an important drug used to treat nausea and dizziness.
Between December 2013 and December 2017, the prices paid by the NHS for Prochlorperazine rose by around 700% from £6.49 per pack of 50 tablets to £51.68. 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 CMA 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.
The CMA provisionally finds that Alliance, Focus, Lexon and Medreich entered into an overarching agreement that was implemented through 2 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 Prochlorperazine in January 2014, it did not supply the product until November 2017.
The CMA alleges that each of the agreements between Alliance and Focus and between Focus, Lexon and Medreich, individually broke competition law.
Ann Pope, CMA Senior Director of Antitrust, said:
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. The NHS should not be denied the opportunity of benefitting from an increased choice of suppliers, or lower prices, for important medicine.
This is the CMA’s provisional finding and the companies now have the chance to make representations to the CMA before it reaches a final decision.