CMA fines drug companies overcharging NHS for hydrocortisone tablets

CMA fines drug companies overcharging NHS for hydrocortisone tablets

The Competition and Markets Authority (CMA) has imposed fines totalling over £260 million for competition law breaches in relation to the supply of hydrocortisone tablets, something tens of thousands of people in the UK depend on to treat adrenal insufficiency.

The fines are the result of an investigation into the conduct of several pharmaceutical firms which found that Auden Mckenzie and Actavis UK (now known as Accord-UK) charged the NHS excessively high prices for hydrocortisone tablets for almost a decade.

To protect its position as sole provider of the tablets, and enable it to continue to increase prices, Auden Mckenzie also paid off would-be competitors AMCo (now known as Advanz Pharma) and Waymade to stay out of the market. Actavis UK continued paying off AMCo after taking over sales of hydrocortisone tablets in 2015.

The CMA found that Auden Mckenzie and Actavis UK increased the price of 10mg and 20mg hydrocortisone tablets by over 10,000% compared to the original branded version of the drug, which was sold by the drug’s previous owner prior to April 2008. This meant the amount the NHS had to pay for a single pack of 10mg tablets rose from 70p in April 2008 to £88.00 by March 2016. For the 20mg strength, prices rose from £1.07 to £102.74 per pack over the same period. After competitors entered the market, prices fell gradually, but Actavis UK continued to charge high prices and higher prices than its rivals.

The impact on the NHS – and ultimately the UK taxpayer – was significant. Before April 2008, the NHS was spending approximately £500,000 a year on hydrocortisone tablets. This had risen to over £80 million by 2016.

Accord-UK – and, for their ownership periods, its parent companies Intas and Accord and its former parent firm Allergan – have been fined £155 million for charging the NHS excessive and unfair prices for hydrocortisone tablets for almost 10 years, from 2008 to 2018. From 2008 to 2015, hydrocortisone tablets were sold by Auden Mckenzie. Actavis UK (now known as Accord-UK) took over the business in 2015 and is held liable for Auden Mckenzie’s conduct before that date.

Market sharing

The CMA has also fined Accord-UK and Allergan – as former parent – a further £66 million for paying two would-be competitors to stay out of the market.

Auden Mckenzie paid pharmaceutical companies Waymade and AMCo not to enter the market with their own generic versions of hydrocortisone tablets. Waymade was set to enter with 10mg and 20mg versions and AMCo with a 10mg version. In exchange for staying out of the market, Auden Mckenzie paid the companies on a monthly basis – paying AMCo £21 million and Waymade £1.8 million in total over the duration of the relevant agreement. After taking over sales of hydrocortisone tablets in 2015, Actavis UK continued to pay off AMCo.

For their part in the collusion, the CMA has fined Advanz – and its former parent Cinven – a total of £43 million and Waymade £2.5 million.

These illegal agreements were in place for approximately four years each – Waymade was only party to the 10mg agreement for a short period before its 10mg business was sold to Cinven and AMCo took its place. For the majority of this time Auden Mckenzie remained the only supplier of the drug and almost doubled its price, with the amount the NHS had to pay increasing from £49 to £88 per packet.

By colluding with AMCo and Waymade to keep them out of the market, Auden Mckenzie, and later Actavis UK, denied the NHS the potential savings that could have resulted if the companies had been competing against each other.

As well as imposing substantial fines, the CMA’s decision means the NHS will be able to seek damages for the firms’ behaviour, should it choose to do so.

The investigation into these firms is part of the CMA’s ongoing work in the pharmaceutical sector, and it currently has a number of live investigations. Recent action includes securing an £8 million repayment to the NHS after companies took part in illegal arrangements relating to the supply of fludrocortisone, and fining 4 firms £3 million for breaking competition law regarding the antidepressant nortriptyline.

Andrea Coscelli, Chief Executive at the CMA, said: “These are without doubt some of the most serious abuses we have uncovered in recent years. The actions of these firms cost the NHS – and therefore taxpayers – hundreds of millions of pounds.

“Auden Mckenzie’s decision to raise prices for de-branded drugs meant that the NHS had no choice but to pay huge sums of taxpayers’ money for life-saving medicines. In practice, the NHS was at one point being charged over £80 for a single pack of tablets that had previously cost less than £1.

“These were egregious breaches of the law that artificially inflated the costs faced by the NHS, reducing the money available for patient care. Our fine serves as a warning to any other drug firm planning to exploit the NHS.”