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24 May 2019Big Pharma

CMA accuses 4 pharma companies of anti-competitive conduct

Four pharmaceutical companies allegedly agreed not to compete for the supply of an anti-nausea tablet to the National Health Service (NHS), according to objections filed by the UK Competition and Markets Authority (CMA).

In a statement issued yesterday, May 23, the CMA claimed that between December 2013 and December 2017 the prices paid by the NHS for prochlorperazine rose by around 700% from £6.49 ($8.23) per pack of 50 tablets to £51.68 ($65.50).

From 2014 to 2018, the annual costs incurred by the NHS for the anti-nausea drug increased from around £2.7 million to around £7.5 million, even though the number of packs dispensed fell, according to the CMA.

It claimed that the increase in costs was driven by Alliance Pharmaceuticals, Focus, Lexon and Medreich, four companies that allegedly agreed not to compete with each other for the supply of prescription-only drugs.

“The CMA alleges that each of the agreements between Alliance Pharmaceuticals and Focus and between Focus, Lexon and Medreich, individually broke competition law,” said the competition watchdog’s statement.

Under the 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 shared these payments with Medreich.

Provisionally, the CMA has claimed that Lexon and Medreich had been taking steps to launch their jointly developed prochlorperazine, before entering into this arrangement.

Although Medreich obtained a licence to supply prochlorperazine in January 2014, it did not supply the product until November 2017, said the watchdog.

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 finding is provisional and the four pharma companies now have the opportunity to make representations to the CMA before it reaches a final decision.

Alliance said 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 on an exclusive basis. 

A spokesperson for the company said it will review the CMA's objections in detail and will “work closely with the CMA to resolve its alleged objections”.

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