The Competition and Markets Authority (CMA) has provisionally found four drug companies to have broken competition law over the sale of an anti-nausea drug to the NHS.
A statement of objections published by the CMA on 23 May 2019 alleges that the four firms — Alliance, Focus, Lexon and Medreich — agreed not to compete for the supply of prescription-only prochlorperazine 3mg buccal (dissolvable) tablets to the NHS between June 2013 and July 2018.
The CMA revealed that between December 2013 and December 2017, the price paid by the NHS for the product rose sharply by around 700% from £6.49 per pack of 50 tablets to £51.68.
The annual NHS cost for the drug rose from around £2.7m in 2014 to around £7.5m in 2018, even though fewer packs were dispensed, it said.
The CMA has provisionally found that Lexon and Medreich were paid a share of the profits earned by Focus on the supply of the Alliance product, and agreed not to compete for the supply of prochlorperazine in the UK.
It also provisionally found that Alliance, Focus, Lexon and Medreich entered into an overarching agreement that was implemented through two separate agreements — one between Alliance and Focus, and one between Focus, Lexon and Medreich.
Under these 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, in turn, shared these payments with Medreich.
In its provisional findings, the CMA alleges that, before entering into this arrangement, Lexon and Medreich had been taking steps to launch their jointly developed prochlorperazine.
Although Medreich obtained a licence to supply prochlorperazine in January 2014, it did not supply the product until November 2017, the CMA alleges.
The CMA goes on to allege that each of the agreements between Alliance and Focus and between Focus, Lexon and Medreich, individually broke competition law.
Anne Pope, senior director of anti-trust at the CMA, said: “Agreements where a [drug] 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.”
The authority, which launched its investigation into potential competition law breaches in October 2017, has now invited the four companies to respond to the allegations before it makes its final decision.