Firms fined £35m for colluding in drug supply to NHS

Five firms have been fined more than £35 million by the competition watchdog for colluding to restrict the supply of an anti-nausea tablet, sending costs to the NHS soaring by 700%.

The Competition and Markets Authority (CMA) said drugs firms Alliance Pharmaceuticals, Lexon, Medreich and former and current owners of Focus, Advanz and private equity group Cinven broke the law by striking an illegal arrangement over the supply of Prochlorperazine – an important treatment for nausea, dizziness and migraines.

The NHS saw the price of the drug surge by 700% from £6.49 per pack of 50 tablets to £51.68 between 2013 and 2017, according to the CMA.

This saw annual costs to the NHS for the drug soar from around £2.7 million to about £7.5 million, even though the number of packs dispensed fell.

The CMA’s investigation found the firms colluded to ensure a competitor was paid not to launch a product, which enabled price increases.

The CMA said Alliance appointed Focus as its distributor and Lexon and Medreich were paid a share of the profits earned by Focus on the supply of the Alliance drug.

In its findings, the regulator said that, before entering into the arrangement, Lexon and Medreich had been taking steps to launch their jointly developed rival drug.

Although Medreich obtained a licence to supply Prochlorperazine in January 2014, it did not supply the product until late 2017.

The CMA’s fines include £7.9 million for Alliance Pharmaceuticals, a £7.3 million fine for Lexon, a £4.6 million penalty for Medreich and a fine for Focus of £15.5 million, split between current owner Advanz and previous parent Cinven.

Medreich’s fine was reduced by 40% for admission and co-operation with the probe.

The CMA said Advanz, Cinven and Lexon have all been issued with fines in previous CMA pharmaceutical investigations, with penalties for Advanz and Cinven marking the first time a company has been fined by the watchdog in three separate investigations.

Chief executive Andrea Coscelli said: “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.

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

He added: “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.”