Pharmaceutical firms fined £35m for restricting competition

The Competition and Markets Authority found, from 2013 to 2018, Alliance Pharmaceuticals, Focus, and Lexon restricted competition in supplying prochlorperazine tablets to the NHS.

Another company (Medreich) was involved in the arrangement between February 2014 and February 2018. Prochlorperazine is an important drug used to treat nausea, dizziness and migraines.

Under the arrangement, Alliance Pharmaceuticals appointed Focus as its distributor, and Lexon and Medreich were paid a share of the profits that Focus earned by selling Alliance’s product. In return, Lexon and Medreich agreed not to compete in the supply of these prochlorperazine tablets in the UK.

Before entering into this arrangement, Lexon and Medreich had been taking steps to launch their jointly-developed version of prochlorperazine. Although Medreich first obtained a licence to supply prochlorperazine in January 2014, it did not supply commercial volumes of the product during the period of the infringement.

From December 2013 to December 2017, the prices paid by the NHS for prochlorperazine rose by 700%. Consequently, between 2014 and 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 fined the pharmaceutical and private equity firms involved a total of over £35m for the relevant periods in which they broke the law.

This includes: a £7.9m fine for Alliance Pharmaceuticals; a £7.3m fine for Lexon; a £4.6m fine for Medreich; and a fine for Focus of £15.5m, apportioned between Advanz and Cinven.

Andrea Coscelli, chief executive of the CMA, said: “The size of the fines reflects the seriousness of this breach. These firms conspired to stifle competition in the supply of this important medication, so that the NHS – the main buyer of the drugs – lost the opportunity for increased choice and lower prices.

“While the arrangement was in place, the price increased significantly for a drug that people rely on to manage debilitating nausea, dizziness and migraines. All firms should know that we will not hesitate to take action like this against any businesses that collude at the expense of the NHS.”