Competition watchdog accuses drug companies of illegal market sharing

Four pharmacy wholesalers have been accused by the competition watchdog of breaking the law through illegal market sharing.

The drug companies include Redditch-based Lexon UK Ltd, which has sites in Leeds, Durham and Dublin, along with Wiltshire-based Alliance Pharmaceuticals, London-based Focus and Medreich.

They have been accused by the Competition and Markets Authority of agreeing not to compete in the supply of an anti-nausea drug in the UK which was supplied to the National Health Service between June 2013 and July 2018.

The drug in question is prescription-only Prochlorperazine 3mg dissolvable tablets which is used to treat nausea and dizziness.

The CMA said 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.

Overall the annual costs incurred by the NHS for Prochlorperazine increased from around £2.7m to around £7.5m, the CMA said, even though the number of packs dispensed fell, it said.

The CMA said that it has provisionally found that Lexon and Medreich were paid a share of the profits earned by Focus on the supply of the Alliance product, and agreed not to compete for the supply of Prochlorperazine in the UK.

The CMA alleges that each of the agreements between Alliance and Focus and between Focus, Lexon and Medreich, individually broke competition law.

Ann Pope, CMA senior director of Antitrust, said: “Agreements where a company pays a rival not to enter the market can lead to higher prices and deprive the NHS of huge savings that often result from competition between drug suppliers.

“The NHS should not be denied the opportunity of benefitting from an increased choice of suppliers, or lower prices, for important medicine.”

These are the CMA’s provisional findings and the companies will be able to further defend themselves before the CMA makes a final decision.

Alliance Pharma said: “Alliance Pharma notes the announcement this morning from the Competition and Markets Authority that it has issued a Statement of Objections to a number of companies including Alliance alleging anti-competitive agreements in relation to the sale of prescription prochlorperazine, one of the smaller products in Alliance’s portfolio which had peak sales in 2015 of £1.9m and sales of less than £0.2m in 2018.

“Alliance confirms that it has had no involvement in the pricing or distribution of prochlorperazine since2013, when it was out-licensed by the company to Focus Pharmaceuticals on an exclusive basis as is normal market practice. Alliance has not had control of or influence on, and nor has it benefited from, any price increases.

“Prior to 2013, prochlorperazine was marketed directly by the company. Alliance will review the Statement of Objections in detail and work closely with the CMA to resolve its alleged objections.

“Alliance strongly condemns anti-competitive practices.”

Lexon has been contacted for comment.