Pharma firms hit with heavy fines for conspiring to stifle competition

The Competition and Markets Authority has fined three businesses over £35m for an illegal arrangement in the supply of important NHS prescription anti-nausea tablets.

Companies penalised include Lexon, which has bases in Leeds and Redditch.

The CMA says it found that, from June 2013 to July 2018, Lexon, Alliance Pharmaceuticals and Focus (now owned by Advanz, previously owned by the private equity firm Cinven) were involved in an arrangement that restricted competition in the supply of prochlorperazine 3mg dissolvable or “buccal” tablets to the NHS.

Another company (Medreich) was involved in the arrangement between February 2014 and February 2018. Prochlorperazine is used to treat nausea, dizziness and migraines.

Under the arrangement, Alliance Pharmaceuticals appointed Focus as its distributor, and Lexon and Medreich were paid a share of the profits that Focus earned by selling Alliance’s product.

In return, Lexon and Medreich agreed not to compete in the supply of these prochlorperazine tablets in the UK.

Before entering into this arrangement, Lexon and Medreich had been taking steps to launch their jointly-developed version of prochlorperazine.

Although Medreich first obtained a licence to supply prochlorperazine in January 2014, it did not supply commercial volumes of the product during the period of the infringement.  

From December 2013 to December 2017, the prices paid by the NHS for prochlorperazine rose by 700%. 

Consequently, between 2014 and 2018, the annual costs incurred by the NHS for prochlorperazine increased from around £2.7m to around £7.5m, even though the number of packs dispensed fell. 

The penalties imposed by the CMA include: a £7.3m fine for Lexon; a £7.9m fine for Alliance Pharmaceuticals; a £4.6m fine for Medreich; and a fine for Focus of £15.5m, apportioned between Advanz and Cinven.

Medreich’s fine would have been higher, but was reduced by 40% as a result of the firm being granted leniency in return for admitting its involvement in the infringement and co-operating with the CMA’s investigation.

Andrea Coscelli, chief executive of the CMA, said: “The size of the fines reflects the seriousness of this breach. 

“These firms conspired to stifle competition in the supply of this important medication, so the NHS – the main buyer of the drugs – lost the opportunity for increased choice and lower prices.

“While the arrangement was in place, the price increased significantly for a drug that people rely on to manage debilitating nausea, dizziness and migraines.

“All firms should know we will not hesitate to take action like this against any businesses that collude at the expense of the NHS.”

Lexon, Advanz, Cinven have all previously been issued fines in previous CMA pharmaceutical investigations.