Following an investigation, the Competition and Markets Authority (CMA) has found that four pharmaceutical companies broke competition law in relation to the supply of an antidepressant.
The probe by the CMA into the supply of nortriptyline, a drug relied on by thousands of patients every day to relieve symptoms of depression, has resulted in fines totalling more than £3.4 million, and payment of £1 million directly to the NHS. It has also led to the disqualification of a company director.
The Chapter I prohibition in the Competition Act 1998 prohibits anti-competitive agreements and concerted practices between businesses which have as their object or effect the prevention, restriction or distortion of competition within the UK. Similarly, Article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits anti-competitive agreements and concerted practices which may affect trade between EU member states.
The final fines in respect of the market sharing infringement were:
- £1,882,238 (Accord-UK)
- £75,573 (King)
Both companies were handed reduced fines as they admitted their involvement in the infringement.
The final fines in respect of the illegal sharing of commercially sensitive information were:
- £174,912 (Alissa)
- £75,573 (King)
- £1,220,383 (Lexon)
Alissa and King were handed reduced fines as they admitted their involvement in the infringement.
The penalties imposed on King in respect of both infringements would have been significantly higher but were reduced to ensure that neither exceeded 10% of its worldwide turnover, which is the statutory maximum that the CMA can impose for an infringement of competition law.
The total payment of £1 million made by Auden Mckenzie and Accord-UK to the NHS will be allocated between the Department of Health and Social Care in England and the equivalent bodies in Scotland, Wales and Northern Ireland in accordance with the Barnett formula.
Breaches of competition law
The CMA found that, rather than competing, King Pharmaceuticals Ltd and Auden Mckenzie (Pharma Division) Ltd shared out between them the supply of nortriptyline to a large pharmaceutical wholesaler. From September 2014 to May 2015, the 2 companies agreed that King would supply only 25mg and Auden Mckenzie only 10mg tablets. The two firms also colluded to fix quantities and prices.
King and Auden Mckenzie have now admitted breaking the law. After this market sharing ended, Accord-UK Ltd took control of Auden Mckenzie’s nortriptyline business, and so the CMA holds it responsible for Auden’s illegal conduct.
As a result, the CMA has fined King and Accord-UK £75,573 and £1,882,238 respectively. On top of this, Accord-UK and Auden Mckenzie have agreed to make a £1 million payment to the NHS in connection with the case. It is the second time the CMA has secured payment to the NHS following one of its pharmaceutical investigations.
The CMA is also fining King, Lexon (UK) Ltd and Alissa Healthcare Research Ltd for illegally sharing commercially sensitive information, to try to keep nortriptyline prices up. Between 2015 and 2017, when the cost of the drug was falling, the 3 suppliers exchanged information about prices, the volumes they were supplying, and Alissa’s plans to enter the market.
Director disqualification
The CMA has also secured the disqualification of Dr Philip Hallwood, a director at King and the sole director of consultancy firm Praze. Praze conducted King’s corporate and commercial services during the illegal activity and took part in this alongside King.
After King and Praze admitted to their involvement, Dr Hallwood signed a legally binding undertaking which disqualifies him as director of both companies. This means he cannot be involved in the management of any UK company for 7 years.
The CMA is also considering the possible disqualification of other directors. Any updates to this investigation will be made on the CMA’s dedicated web pages.
Andrea Coscelli, Chief Executive at the CMA, said:
“These firms exchanged sensitive information and shared out supply to try and keep prices up, meaning the NHS – and ultimately the UK taxpayer – could have been paying over the odds for this vital drug.
“That’s why we’ve worked hard to secure £3.4 million in fines and another pay out for the NHS.
“Today’s decisions should act as a clear warning to any pharmaceutical company that considers stifling competition and cheating the NHS.”
Chief Executive of the National Pharmacy Association, Mark Lyonette commented:
“As restricted competition can lead to the NHS and taxpayers facing higher costs, we are not surprised that the CMA has imposed significant financial penalties on these companies.
“Community pharmacists can also lose out if a lack of choice results in higher medicines prices.”
More information on the CMA is available on the about the CMA page which you can access here.
