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CMA takes unusual step of securing £8 million in compensation for the NHS

Posted on 15 November 2019

In October, the Competition & Markets Authority announced a further Statement of Objections ("SO") in relation to one of the many pharma pricing probes that were commenced in 2016.

In the SO the CMA provisionally found that Aspen Pharma had colluded with Amilco Limited and Tiofarma Beheer B.V to ensure that the latter did not compete with Aspen in the UK market for fludrocortisone acetate 0.1mg tablets (the "Medication"). In particular, the CMA alleges that in exchange for not competing with Aspen Tiofarma was made the sole manufacturer of the Medication for direct sale in the UK and Amilco received a 30% share of the increased prices that Aspen was able to charge for the Medication.

As sometimes happens in such cases, in order to settle the matter Aspen offered a package of commitments to the CMA which they claimed would bring to an end the allegedly anti-competitive behaviour. More unusually, however, Aspen also offered to pay the NHS £8 million in compensation for any historic overpayment for the Medication. In fact, this is the first time that a settlement of this kind has been offered in response to a CMA SO.

Speaking about the settlement, Andrea Coscelli, the CMA’s Chief Executive, said:

The CMA launched this investigation because we consider it unacceptable for the NHS – and the taxpayers who fund it - to have to pay millions of pounds more than they should for this life-saving drug.

This is the first time a CMA investigation will secure a payment for the NHS. The £8 million Aspen has agreed to provide will save the NHS the time and expense of seeking damages in court. Importantly, Aspen has also committed to ensuring there are more competitors in this market, giving the NHS the opportunity to secure better value for UK taxpayers’ money in the future.

We welcome Aspen approaching us to find a new way of addressing the CMA’s concerns. We believe this resolution will benefit the NHS, patients and taxpayers. Meanwhile we continue to investigate the 2 other companies we suspect illegally participated in this arrangement.

This is a watershed moment for the CMA and represents the first time that it has effectively sought compensation for the victim of anti-competitive behaviour as part of a settlement arrangement. Clearly, advocating for compensation for a single, large scale, publicly owned purchaser such as the NHS is less controversial than if, for example, the CMA had tried to seek compensation for individual consumers. However, it is nevertheless a clear example of the CMA's shift in emphasis following recommendations made by its chairman Lord Tyrie to the Secretary of State for Business, Energy and Industrial Strategy ("BEIS") in February, designed to shift the focus of the CMA towards acting to "safeguard the interests of consumers and to maintain and improve public confidence in markets".

The reforms proposed by Lord Tyrie seek to impose an overriding "consumer interest" duty on both the CMA and the Courts.  Currently, there is no primary duty on the CMA to protect consumers. This means that the CMA cannot act swiftly if it identifies a detriment to consumers which does not fall within its current regulatory purview (e.g. breaches of competition law). By imposing a "consumer interest" duty, the recommendations' aim is to free the CMA to intervene where it identifies a detriment to consumers.

In order to achieve this objective the CMA is also seeking legislative changes which would bolster its consumer protection powers. If BEIS accepts Lord Tyrie's recommendations the CMA's new powers would enable it to:

  • make determinations on whether consumer protection law has been broken and declare the fact publicly;
  • direct businesses to bring infringing activities to an end;
  • impose fines directly on businesses for breaches of consumer protection law;
  • impose fines on businesses for failure to comply with undertakings in respect of consumer protection law; and
  • use interim measures to address suspected breaches of consumer protection law.

If these proposals do go through it's likely that in the near future we will see the CMA acting more quickly in cases where consumers are harmed, treated unfairly or misled. In a sector such as life sciences, where companies' commercial practices clearly impact upon (often vulnerable) individuals, whether as users of medical devices or treatments, private healthcare insurance or perhaps even medical information from online resources, the CMA scrutiny of the sector is unlikely to diminish.

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