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Suppliers face £130m fine after appeal against CMA finding on hydrocortisone pricing fails


Suppliers face £130m fine after appeal against CMA finding on hydrocortisone pricing fails

Pharmaceutical suppliers which raised prices for generic hydrocortisone tablets by over 10,000 per cent from 70p to £72 over a decade have had their appeal against a Competition and Markets Authority finding of excessive pricing rejected.

In a judgment published on 18 September, the Competition Appeal Tribunal unanimously upheld the CMA’s finding that the Auden McKenzie and Actavis UK (now known as Accord UK) charged excessive and unfair prices between 2008 and 2018 for hydrocortisone tablets. The companies must now pay almost £130m in fines.

Michael Grenfell, executive director of enforcement at the CMA, said: “This is another important step forward in our fight against abuse of the NHS through the pricing of “niche” generic drugs, whose suppliers exploit weak competition and regulation to hike prices. This infringement was serious and – in its effects on the NHS, on the cost of patient care, and on taxpayers - shocking. Following the actions of these companies, NHS spending on this essential medicine rose from around £0.5 million a year to over £80 million.

The appeal followed an infringement decision issued by the CMA in July 2021, which found that several pharmaceutical firms had breached competition law in relation to the supply of hydrocortisone tablets.

The CMA found that Auden Mckenzie and Actavis UK (which took over the Auden business in 2015) had abused their dominant position by charging excessive and unfair prices for hydrocortisone tablets; that Auden had colluded with its potential competitor Waymade to buy off competition on 20mg and 10mg hydrocortisone tablets; and that Auden and later Actavis UK had colluded with another potential competitor, AMCo (now known as Advanz Pharma), to continue buying off competition on 10mg hydrocortisone tablets.

The CMA imposed fines totalling £266.5 million for these infringements covering its abuse of dominance and its collusion findings.

The CAT judgment deals only with the abuse of dominance findings, which accounted for £155.2 million of that total original CMA fine. The Tribunal has reserved its judgment in relation to the appeal against the CMA’s findings on collusion.

While upholding the CMA’s findings on liability throughout the relevant period, the Tribunal found that Actavis UK’s former parent Allergan should not have to pay a penalty for the period when it owned Actavis UK subject to ‘hold separate’ commitments as these meant that Allergan did not exercise control over its subsidiary.

The Tribunal upheld the CMA’s penalties in all other respects. The result is that the total penalties for the abuses will be reduced by approximately £26 million, to almost £130 million. These are the highest ever CMA penalties upheld by the Tribunal.

The CMA’s original investigation showed that prices of hydrocortisone tablets rose by over 10,000 per cent compared to the original branded version of the drug – meaning the prices paid by the NHS for a pack of 10mg tablets rose from 70p in April 2008 to £72 by March 2016.

It found that Auden/Actavis made an illegal profit of at least £145 million from the excessive prices. The Tribunal agreed with the CMA that there was no justification for these price increases or for the high prices Actavis UK continued to charge after competitors began to enter the market.

The CMA imposed fines for the excessive pricing abuses on Actavis UK, its current parents Intas/Accord and its former parent Allergan.

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