Alliance Pharmaceuticals, Focus Pharmaceuticals and the wholesaler Lexon entered into an agreement that restricted the competition for the supply of prochlorperazine 3mg dissolvable tablets to the NHS between June 2013 and July 2018, according to a Competition and Markets Authority (CMA) statement released today (February 3).
Meanwhile, pharmaceutical company Medreich was involved in the arrangement between February 2014 and February 2018, the CMA said.
Alliance Pharmaceuticals and Advanz both disagreed with the CMA’s decision and told C+D they will be appealing the ruling. Read their full responses below.
Focus Pharmaceuticals is currently owned by Advanz but was previously indirectly owned for one year by the private equity firm Cinven, which did not want to comment. Lexon also declined to comment.
What did the CMA's investigation find?
During an investigation, the CMA found that Alliance Pharmaceuticals had appointed Focus as its distributor, while Lexon and Medreich would get a share of the profits made by Focus on the sale of Alliance’s product.
As part of the arrangement, Lexon and Medreich “agreed not to compete in the supply of these prochlorperazine tablets in the UK”, the CMA found.
While Medreich had obtained a licence to supply prochlorperazine in January 2014, “it did not supply commercial volumes of the product during the period of the infringement”, the CMA determined.
Prochlorperazine is an “important” medicine used to treat nausea, dizziness and migraines. The actions of the four companies meant that, from December 2013 to December 2017, “the prices paid by the NHS for prochlorperazine rose by 700%”, the CMA found.
“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,” it added.
The watchdog fined the four companies for the periods it found they had broken the law as follows:
- £7.9m fine for Alliance Pharmaceuticals
- £7.3m fine for Lexon
- £4.6m fine for Medreich
- £15.5m fine for Focus, split between Advanz and Cinven
The fine imposed on Medreich “would have been higher” but was reduced by 40% because the company admitted its involvement and co-operated with the CMA, the watchdog added.
Alliance and Advanz to appeal CMA’s decision
Alliance and Advanz have both told C+D today that they will appeal the CMA’s decision.
A spokesperson for Alliance said that the company “fundamentally disagrees with the CMA’s finding” and will also question the fine imposed by the CMA.
Alliance “did not participate in, or profit from, any market sharing arrangement and refutes any involvement in the alleged competition law infringement,” the spokesperson continued.
They added that the company “takes compliance with competition law very seriously and has fully assisted the CMA in its investigation”.
Meanwhile, a spokesperson for Advanz said the company “disagrees” with the CMA’s findings on its affiliate Focus Pharmaceuticals.
“Advanz Pharma takes competition law very seriously and will be appealing. We believe the CMA has misunderstood the context in which Focus sought to ensure the cost effective and regular supply of this medicine to the market,” the spokesperson concluded.
Commenting on the CMA’s decision to fine the companies, chief executive Andrea Coscelli 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 that the NHS – the main buyer of the drugs – lost the opportunity for increased choice and lower prices.
“All firms should know that we will not hesitate to take action like this against any businesses that collude at the expense of the NHS,” he added.
