The competition watchdog has fined three companies a combined total of more than £100m for hiking the price of a thyroid hormone deficiency treatment by over 1,000% between 2009 and 2017.
The Competition and Markets Authority (CMA) said in a statement on 29 July 2021 that it was fining the companies for charging “excessive and unfair prices” for 20mcg liothyronine tablets.
Between 2009 and 2017, Advanz was able to increase the price of liothyronine tablet packs from £20 to £248 owing to “limited or no competition” in their supply, the CMA said, meaning liothyronine tablets could sustain repeated price increases.
The price increases led to liothyronine tablets being placed on “the NHS ‘drop list’ in July 2015”, the CMA said, which led to patients either having their current treatment stopped or having to purchase liothyronine tablets at their own expense.
“That is particularly concerning, given that many patients do not respond adequately to the main treatment for hypothyroidism, levothyroxine tablets — and instead rely on liothyronine tablets to alleviate symptoms such as extreme fatigue and depression,” the statement said.
As a result, the CMA has issued Advanz with a fine of £40.9m, along with a £8.6m fine for HgCapital and a £51.9m fine for Cinven — two private equity firms that previously owned the businesses now forming part of Advanz.
While the CMA has fined the companies for practices that occurred between 2009 and 2017, it said that a “price optimisation” strategy began at Advanz in 2007 and involved an overall price increase for liothyronine tablets of more than 6,000%.
The CMA previously announced a refined window of investigation into liothyronine tablet prices in 2019.
The “price optimisation” strategy involved identifying genericised drugs with limited or no competition and high barriers to entry, the CMA said.
By “de-branding” these drugs, it could remove them from the price regulation regime, which only applied to branded drugs, enabling it to set whatever prices it chose.
An investigation by The Pharmaceutical Journal in November 2020 revealed that drug tariff prices for 33 generic ‘Category A’ medicines were found to have more than doubled between July 2018 and October 2020, costing the NHS an additional £76m.
Category A medicines are commonly available from large wholesalers, but are not subject to the price restrictions under Category M.
In July 2018, the government enacted three pieces of legislation that would allow them to gather information on Category A generic medicine prices, implement pricing caps, and fine suppliers for exceeding those caps. But as of 8 October 2020, the government had yet to use any of these powers.
Andrea Coscelli, chief executive of the CMA, said the price increases imposed by Advanz “came at a huge cost to the NHS, and ultimately to UK taxpayers”.
“But that wasn’t all — it also meant that people dealing with depression and extreme fatigue, as a result of their thyroid conditions, were told they could not continue to receive the most effective treatment for them due to its increased price. Advanz’s strategy exploited a loophole enabling it to reap much higher profits.”
Advanz said in a statement that it “takes competition law very seriously”.
“We utterly disagree with the CMA’s decision on the pricing of liothyronine tablets and will be appealing,” it added.
“In addition, any liothyronine price increases were all pre-notified to, and agreed in advance and in writing by, the Department of Health and Social Care.”