Colin Miller discusses recent crackdowns on pharma companies that have violated competition law.
The Competition and Markets Authority (CMA) in the UK has issued record fines to a number pharma companies who have broken competition law.
Advanz Pharma and its owners were fined more that PS100 million for abusing market power by charging Nhs excessive prices for thyroid medications. Over the past eight years, prices rose by more than 1,000%. The average price of a packet tablet increased from PS20 up to PS248.
Auden Mckenzie, and the parent company act a vis (now Accord UK), were also fined PS155m for charging too much to NHS for life-saving Hydrocortisone tablets. Prices have risen by more than 10,000 percent. Practically, it was revealed that the NHS’s annual expenditures increased by over PS80m in eight years. The price of a packet tablet was increased by about 70p to PS88. CMA highlighted that the fines were a result of the negative effect this behavior has had on NHS, already in severe financial strain, and patients who find it more difficult to get vital medication.
These are the latest developments during the recent increased focus on pharma. The sector is regulated but will not be subject to the strictures of competition authorities.
The European Commission published a 2019 report that highlighted the European Commission’s actions in the pharma industry to combat anti-competitive behavior. It also stated that the European Commission would continue to closely monitor pharma for the future. In 2020, the European Commission published a report that outlined its strategy to combat anti-competitive behavior. Regardless of Brexit, UK companies will continue to be under the watchful eye of the European Commission in the event that their activities affect the EU.
The UK authorities took a similar tough approach. They stated in their annual plan for 20/21, that they would ensure that the NHS did not spend significantly more on essential medicines and treatments and that those who depend on these drugs and treatments are not left behind.”
This echos the CMA’s warning to the health sector last January when it warned it would swiftly take action against anyone who tries to profit from the pandemic. For example, raising prices or making it more difficult for patients access to vital medicine or equipment.
CMA is also investigating alleged market sharing agreements as well as illegal exchanges between suppliers of commercially sensitive information. Pay for delay agreements between an existing drug originator and a company that holds the I Panda company that intends to introduce a generic version of the drug are another area of interest.
In exchange for compensation, the generic manufacturer agrees that it will delay entry onto the market. Auden Mckenzie was recently fined for not only excessive pricing, but also for participating in illegal pay-for-delay deals with Waymade Pharma and Advanz Pharma. Auden Mckenzie agreed to pay Waymade and Advanz Pharma to prevent them from entering the market with generic hydrocortisone tablet versions. Auden Mckenzie also imposed a PS155m penalty for excessive pricing and the parties were fined total PS66m.
Pharma companies must take precautions to ensure that their market activities and contracts are not in violation of the rules, especially considering the CMA’s recent interest in the sector. In contract negotiations, extra care must be taken to ensure that pricing and supply strategies are not violated.
Negotiations with customers or suppliers, and particularly any discussions with rivals. With the CMA’s attention on pharma for some time, it is up to the companies in this sector to develop compliance programs to identify and address any issues early and prevent them from becoming another victim of this crackdown.