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CMA continues its focus on the pharma sector

Posted on 09 July 2019

CMA continues its focus on the pharma sector

The Competition and Markets Authority has continued its vigorous inquiry into the pharmaceutical sector in Q2, issuing two statement of objections ("SO"), and publically identifying the sector as a continuing "priority".

In May 2019, the CMA addressed an SO to Alliance Pharmaceuticals, Focus, Lexon and Medreich on the basis that, between June 2013 and July 2018, they allegedly agreed not to compete for the supply of prescription-only Prochlorperazine 3mg dissolvable or “buccal” tablets to the NHS. Prochlorperazine is a drug used to treat nausea and dizziness. The CMA has identified that, between December 2013 and December 2017, the prices paid by the NHS for Prochlorperazine rose by around 700% from £6.49 per pack of 50 tablets to £51.68. From 2014 to 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 provisionally found that Lexon and Medreich were paid a share of the profits earned by Focus on the supply of the Alliance Pharmaceuticals product, and agreed not to compete for the supply of Prochlorperazine in the UK.

In June 2019, the CMA issued an SO alleging that Auden Mckenzie, King Pharmaceuticals Limited, Lexon and Alissa have breached UK and EU competition law in relation to the supply of 10mg and 25mg nortriptyline tablets in the UK. The CMA has provisionally found that, in 2014, Auden Mckenzie and King agreed that Auden Mckenzie would supply only 10mg nortriptyline tablets and King would supply only 25mg nortriptyline tablets, as well as agreeing to fix the quantities and the prices of supply. The CMA has also accused King, Alissa and Lexon of exchanging commercially sensitive information, including information about prices, volumes and entry plans, to try to keep nortriptyline prices high.

Both cases relate to alleged infringements of the Chapter 1/Article 101 prohibition against anti-competitive agreements and are examples of several cases that the CMA has ongoing in this sector which raise similar issues around pharmaceutical pricing. In June last year, the Competition Appeal Tribunal overturned the CMA's first pharmaceutical pricing decision (against Flynn Pharma and Pfizer relating to phenytoin). The CAT decision is currently under appeal to the Court of Appeal, with the outcome of that decision likely to have a significant impact on the approach, and ultimately the success, of the CMA in relation to the plethora of other cases in this sector. The European Commission also appears to view the appeal as raising significant issues following an intervention in the matter in January 2019. Its views are not yet public.

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