Pharma continues to breach competition law
The Competition and Markets Authority (CMA) has fined pharmaceutical company Advanz in excess of £100 million, finding that it breached competition law having charged excessive and unfair prices in relation to the supply of 20mcg Liothyronine tablets (Liothyronine), inflating the price of the drug by 1,110% between 2009 and 2017.
The decision comes almost five years since the CMA opened its investigation into Advanz’s pricing practices in relation to Liothyronine, and amidst a renewed interest from competition authorities far and wide in addressing competition law violations within the pharmaceutical sector.
In 2007, Advanz established a self-coined "price optimisation" strategy, which was aimed at identifying genericised drugs with limited or no competition and high barriers to entry. Such drugs could be de-branded and subsequently removed from the overarching price regulation regime which only applied to branded drugs, therefore enabling Advanz to set prices at its sole discretion.
Liothyronine tablets, which are used to treat hypothyroidism, a condition caused by thyroid hormone deficiency, fall into this category, and could consequently sustain recurrent price increases. The price of Liothyronine increased from £20 in 2009 to £248 in 2017, a 1,110 % hike, although it saw an overall price increase of over 6,000% since 2007. To put these figures into perspective, the NHS spending on the tablets in 2006 was £600,000; fast forward to 2009 and that had increased to over £2.3 million, while it catapulted to £30+ million by 2016.
Although the categorisation of Liothyronine meant that it could sustain such inflationary prices, the hefty increases impacted those who required the drug. Because of the price hike over time, the NHS placed Liothyronine on its "drop list" - containing items that should not routinely be prescribed to patients in primary care - which led to patients having to either purchase the expensive Liothyronine at their own expense, or potentially face the termination of their current treatment. This was exceptionally problematic in instances where the alternative drug, levothyroxine, was not always suitable for many patients.
The CMA decision
In imposing its fine, the CMA found that the price increases were not driven by any meaningful innovation or investment, the volumes of supply remained broadly stable, and the cost of producing Liothyronine did not significantly increase.
Andrea Coscelli, Chief Executive of the CMA commented that the fine and the CMA's continued work in the pharmaceutical sector "sends a clear message that breaking the law has serious consequences”, and the CMA’s decision supports the NHS in seeking redress for the behaviour it was subjected to should it choose to do so.
The fine is one of the biggest the CMA has levied within the pharmaceutical sector in recent times, highlighting the seriousness of the offence. Recent action by the CMA in the pharmaceutical sector includes securing an £8 million repayment to the NHS in relation to the supply of fludrocortisone, and fining pharmaceutical firms in excess of £260 million for abusing their dominant position in charging unfair and excessive prices by increasing the price of hydrocortisone tablets. A number of other investigations in the sector are ongoing.
If you have any questions or would like further information, on how redress can be sought, please contact Scott Campbell, Head of Competition Disputes, or Partner Lesley Hannah.