Regulatory Focus™ > News Articles > 2019 > 5 > 700% Price Spike Spurs UK to Allege Four Pharma Companies Agreed to Restrict Competition

700% Price Spike Spurs UK to Allege Four Pharma Companies Agreed to Restrict Competition

Posted 23 May 2019 | By Zachary Brennan 

700% Price Spike Spurs UK to Allege Four Pharma Companies Agreed to Restrict Competition

The UK’s Competition and Markets Authority (CMA) on Thursday alleged that Focus Pharmaceuticals, Medreich, Alliance Pharmaceuticals and Lexon have breached UK and EU law by entering into anti-competitive agreements that restricted the supply of the nausea and dizziness drug prochlorperazine.

Under two alleged agreements discovered by CMA, Alliance Pharmaceuticals supplied prochlorperazine exclusively to Focus Pharmaceuticals. And Focus paid Lexon a share of the profits and Lexon then shared these payments with Medreich, CMA alleged.

But prior to the agreements, Lexon and Medreich had been jointly readying a launch of another prochlorperazine product. And even though Medreich obtained a license to supply prochlorperazine in January 2014, it did not supply the product until November 2017.

The allegations follow CMA's finding that the prices paid for prochlorperazine by the National Health Service (NHS) between December 2013 and December 2017 rose by about 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 prochlorperazine also increased from about £2.7 million ($3.4 million) to about £7.5 million ($9.5 million), but the number of medicine packages dispensed fell.

Ann Pope, CMA senior director of antitrust, said: “The NHS should not be denied the opportunity of benefitting from an increased choice of suppliers, or lower prices, for important medicine.”

The four companies now have the chance to tell their side of the story before a final CMA decision.

Alliance said in a statement Thursday that peak sales of prochlorperazine topped out in 2015 at £1.9m ($2.4 million) and sales totaled less than £0.2m ($0.25m) in 2018.

“Alliance confirms 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 Pharmaceuticals Limited on an exclusive basis as is normal market practice. Alliance has not had control of or influence on, and nor has it benefited from, any price increases. Alliance will review the Statement of Objections in detail and work closely with the CMA to resolve its alleged objections,” the company said.

Advanz Pharma, which bought a company that acquired Focus Pharmaceuticals, added in a statement: “We take competition law very seriously and do not believe that competition law has been infringed. We will review the CMA's preliminary position, as specified in its SO [statement of objections], and we plan to respond in detail as we continue to work constructively with the CMA."

Advanz was previously accused by the CMA of breaching UK and EU competition law from at least 1 January 2009 to at least 31 July 2017 by charging excessive and unfair prices for liothyronine tablets in the UK.

“Between January 2009 and July 2017, the price paid by the NHS for liothyronine tablets rose from £15.15 to £258.19, a rise of 1,605%, while production costs remained broadly stable,” CMA said.
 

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