Pharmaceutical suppliers that raised the price of a key drug by more than 10,000% over 10 years face record fines of almost £130 million after their appeal against a Competition and Markets Authority (CMA) finding of excessive pricing was rejected by the Competition Appeal Tribunal (CAT).
In a judgment on 18 September, the Tribunal unanimously upheld the CMA's finding that pharmaceutical suppliers charged "excessive and unfair" prices over the course of a decade for generic hydrocortisone tablets.
The appeal followed an infringement decision issued by the CMA in July 2021 which found that Auden Mckenzie and Actavis UK (now known as Accord-UK) increased prices for a pack of 10mg tablets from 70p in April 2008 to £72 by March 2016, resulting in what investigators described as "an illegal profit of at least £145 million from the excessive prices".
The CMA also found that to protect its position as sole provider of the tablets, Auden McKenzie "paid off would-be competitors AMCo (now known as Advanz Pharma) and Waymade to stay out of the market", and that Actavis UK "continued paying off AMCo after taking over sales of hydrocortisone tablets in 2015".
"Exploitation of Market Power"
In its judgement, the CAT unanimously agreed that the appeal "demonstrates very clearly an illegitimate exploitation of market power to leverage price well in excess of what was fair".
Michael Grenfell, executive director, enforcement at the CMA, described the infringement as "serious", resulting in "shocking" effects on the NHS, the cost of patient care, and on taxpayers. "Tens of thousands of people rely on hydrocortisone tablets to treat life-threatening conditions, such as Addison’s disease, and following the actions of these companies, NHS spending on this essential medicine rose from around £0.5 million a year to over £80 million," he said.
Mr Grenfell emphasised that when the CMA announced their decision to fine the firms in 2021, the findings constituted some of the "most serious abuses" it had uncovered in recent years.
The CMA imposed fines totalling £266.5 million for the infringements covering its abuse of dominance and its collusion findings.
The Tribunal agreed with the CMA that there was "no justification" for these price increases or for the high prices that the firms continued to charge after competitors began to enter the market. "The Tribunal has reached the same conclusions as the CMA, finding 'an illegitimate exploitation of market power to leverage prices well in excess of what was fair', and that the businesses involved committed the abuses intentionally," the CMA highlighted.
The judgment only dealt with the abuse of dominance findings, which accounted for £155.2 million of the total original CMA fine. The Tribunal reserved judgment in relation to the appeal against the CMA's findings on collusion.
Way Paved for the NHS To Seek Compensation
However, the judgement would allow the NHS to seek compensation for the excessive money it had been charged for hydrocortisone tablets, the CMA said.
Today's judgment came five weeks after the Tribunal upheld a CMA ruling in 2021 that Advanz Pharma "abused its dominant position" by charging "excessive and unfair prices for liothyronine tablets" supplied to the NHS.
The CMA said previous action in relation to the pharma sector and fines imposed included:
- Paroxetine (2016): £45 million in fines for anti-competitive agreements and abuse of dominance - reduced to £27.1 million on appeal
- Fludrocortisone (2019): £2.3 million in fines and £8 million redress to the NHS for market sharing
- Nortriptyline (2020): £3.4 million in fines and £1 million redress to the NHS for illegal arrangements including market sharing and information exchange
- Prochlorperazine (2022): £35 million in fines for an illegal arrangement that restricted competition in the supply of prescription tablets
- Phenytoin (2022): £70 million in fines for excessive and unfair pricing
The CMA welcomed the Tribunal's finding that the prices Auden/Actavis UK charged for the "lifesaving" medicine between 2008 and 2018 amounted to an abuse of a dominant position. "These are the highest ever CMA penalties upheld by the Tribunal, and resulted in "record" fines of almost £130 million," it heralded.
"This is another important step forward in our fight against abuse of the NHS through the pricing of so-called 'niche' generic drugs, whose suppliers exploit weak competition and regulation to hike prices," Mr Grenfell said.