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An 'essential' new role for the CMA in pharma pricing?

Posted on 26 November 2020

In October 2020, the Competition & Markets Authority (CMA) announced an abuse of dominance investigation into Essential Pharma in relation to the first-line bipolar disorder treatment, Priadel.  The CMA's announcement is a further demonstration of its interventionist approach in the pharma sector and of the increasing collaboration between the CMA and the Department of Health and Social Care (DHSC), particularly where drug prices are at issue.

Priadel is a brand of lithium carbonate that is owned by Essential Pharma and that is available at 200mg and 400mg tablets (400mg is the most commonly prescribed).

In September 2020 a group of medical bodies and mental health charities wrote to the Health Secretary, Matt Hancock, to express concern about Essential Pharma's behaviour. They alleged that, prior to an announcement by Essential that it proposed to withdraw Priadel, it had significantly increased the price of Camcolit (another brand of lithium carbonate that it owned). Reports suggest that the price rise for Camcolit could be as high as 2,600 per cent, from £3.22 to £87 a packet, with an estimated increase to the NHS of £15 million per year.

It appears from the CMA's announcement that DHSC had asked the CMA to use its interim measure powers to prevent Essential from withdrawing Priadel but ultimately these were not needed as Essential agreed to continue to supply Priadel whilst it tried to reach agreement on price with the DHSC.

The CMA has now reported that Essential and DHSC have reached agreement on a revised price for Priadel that is still lower than alternative bipolar drugs.  Further, Essential Pharma has offered formal commitments to the CMA in relation to its competition concerns, which would last for five years and include continuing to supply Priadel on terms agreed with the DHSC.  The CMA is minded to accept these commitments (in which case the investigation will be concluded) but is seeking views from stakeholders until 9 December 2020 before reaching a final decision.

This development follows the Court of Appeal's decision in March 2020 to set aside the CMA's judgment in a similar price-hike case, Flynn/Pfizer, which we discussed here. Since then the CMA has requested further information from Flynn and Pfizer to allow it to undertake the analysis identified by the Court of Appeal when assessing whether a price is excessive. Whilst the Flynn/Pfizer case remains a work in progress, it's clear that the CMA still sees these cases as an enforcement priority and is willing to come to the aid of DHSC to provide an incentive for pharma companies to negotiate with DHSC on pricing.  Separately, Lexon has recently made its arguments before the Competition Appeal Tribunal in relation to the CMA's fine of £1.2 million over anti-competitive practices relating to provision of nortriptyline, which has also involved the CMA seeking director disqualifications. 

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