CMA defeats legal challenge in medicine pricing case
The Competition Appeal Tribunal has unanimously upheld the CMA’s decision condemning a pharmaceutical supplier for excessive pricing of medicines sold to the NHS.
The Competition and Markets Authority (CMA) welcomes today’s landmark judgment, which endorses all the main elements of the CMA’s decision in respect of liothyronine tablets – an essential medicine to treat thyroid hormone deficiency.
Advanz, the sole supplier of the tablets, increased prices by over 1,000% from £20 to £248 per pack between 2009 and 2017, resulting in an £84 million fine.
Michael Grenfell, Executive Director, Enforcement at the CMA, said:
We are delighted that the Competition Appeal Tribunal has unanimously upheld the CMA’s infringement findings. Today’s landmark judgment reinforces the need for companies to think carefully about how they set prices and paves the way for the NHS to seek compensation.
The CMA will continue to crack down on companies which abuse their market power in ways that harm people and the wider economy.
On 29 July 2021, the CMA found that Advanz’s excessive pricing constituted an abuse of its dominant position, in breach of competition law.
As a result of today’s judgment, Advanz Pharma (the current owner of the Advanz business) together with HgCapital and Cinven (2 former owners of the Advanz business) face a total fine of over £84 million for the relevant periods in which they broke the law. Further information on the CMA’s decision can be found in the final report published on the CMA website.
Advanz Pharma, Cinven, and HgCapital each appealed the CMA’s decision to the Competition Appeal Tribunal. They disputed that the prices charged for liothyronine tablets were excessive and unfair and sought to overturn the fines imposed by the CMA.
In a unanimous judgment, the Tribunal fully upheld the CMA’s finding that Advanz had abused its dominant position by charging excessive and unfair prices for liothyronine tablets between 2009 and 2017.
In particular, the Tribunal found that the price increases were part of a deliberate strategy to exploit the lack of regulatory or competitive constraints and resulted in a significant impact on the NHS. The Tribunal dismissed all of the appellants’ grounds of appeal on liability.
NHS annual spending on the tablets in 2006, the year before the implementation of the strategy, was £600,000, but by 2009 had increased to more than £2.3 million and jumped to more than £30 million by 2016.
More information on the CMA’s investigation into the excessive and unfair pricing of liothyronine tablets is available on the case page.
Notes to editors
-
Previous action taken by the CMA in relation to the pharma sector and the fines imposed:
- Paroxetine (2016): £45 million in fines for anti-competitive agreements and abuse of dominance.
- Fludrocortisone (2019): £2.3 million in fines and £8 million redress to the NHS for market-sharing.
- Nortriptyline (2020): £3.4 million in fines and £1 million redress to the NHS for illegal arrangements including market-sharing and information exchange.
- Hydrocortisone (2021): £260 million in fines for excessive and unfair pricing and market sharing.
- Prochlorperazine (2022): £35 million in fines for an illegal arrangement that restricted competition in the supply of prescription tablets.
- Phenytoin (2022): £70 million in fines for excessive and unfair pricing.
- Previous press release: CMA fines pharma firm over pricing of crucial thyroid drug (29 July 2021).
- While fully upholding the CMA’s infringement findings against all three appellants, the Tribunal decided to reduce the penalties imposed by the CMA on 2 of the appellants (Cinven and HgCapital) by £17.2 million in total, reducing the CMA’s overall fine of over £101 million to £84.2 million. The final penalties by party are: Hg: £6.2 million, Cinven: £37.1 million and Advanz Pharma: £40.9 million.
- For media queries, please contact the press office on press@cma.gov.uk or on 020 3738 6460.
- All enquiries from the general public should be directed to the CMA’s General Enquiries team on general.enquiries@cma.gov.uk or 020 3738 6000.