Generics firms accused of anti-competitive hydrocortisone deal
The Competition and Markets Authority has accused generic drug distributors Auden Mckenzie and Waymade of engaging in illegal anti-competitive agreements over hydrocortisone supply and potentially denying the NHS the chance to make savings on this vital medicine.
The CMA said on Thursday February 28 that it had provisionally found that between July 2011 and April 2015 Auden Mckenzie – then the sole supplier of hydrocortisone tablets in the UK – and rival Waymade had entered into the alleged illegal agreements whereby Waymade did not compete to supply the drug to the NHS.
“This may also have involved Auden Mckenzie abusing its dominant position by making monthly payments to Waymade not to enter the market,” the CMA said.
The watchdog provisionally found that Waymade was prepared to enter the market in May 2011 with stocks of 20mg hydrocortisone tablet but instead froze its stock until July 2015 as part of an alleged agreement involving monthly payments from Auden Mckenzie.
The CMA says that Waymade also obtained a licence to sell 10mg hydrocortisone tablets in 2012 but was persuaded not to enter the market when Auden Mckenzie dropped the price it charged Waymade from the market rate of around £32 per pack to £1.
The CMA said hydrocortisone tablets are an “essential” medication on the NHS and are the front line treatment for Addison’s disease. It noted: “From 2011 to 2015, while Auden Mckenzie remained the sole supplier of 20 mg hydrocortisone tablets, charges to the NHS rose from around £46 to £90 for a pack of 30 tablets, increasing the annual costs incurred by the NHS for the medicine from £1.7 million to £3.7 million.”
The companies now have the opportunity to make representations to the CMA.
If the CMA concludes in its final ruling that the illegal agreement did take place, the companies may face financial penalties of up to 10 per cent of their respective annual worldwide group turnover.
CMA executive director for enforcement Michael Grenfell said: “The CMA has today provisionally found that Auden Mckenzie and Waymade broke competition law through Auden Mckenzie paying it rival to stay out of the market.
“Hydrocortisone is a lifesaving drug for those suffering with Addison’s disease in the UK. The NHS should not be denied the opportunity of benefitting from an increased choice of suppliers and potential savings on what it spends on this essential drug.”
Waymade denied the provisional findings in a statement, saying: “[The company] has reviewed historic pricing of 20mg hydrocortisone tablets and is confident that the timing of Waymade PLC bringing its product to market did not influence the cost of the drugs to the NHS.
"We have expert economic evidence clearly showing that Waymade PLC had a strong incentive to bring its own product to market as soon as possible, even with the relevant agreement in place. Most importantly, it is clear that the price paid by the NHS (the drug tariff) for hydrocortisone 20mg tablets was not impacted by the agreement.”
Waymade said it had “worked hard” to cooperate with the CMA in its investigation and would now take the opportunity to “further explain its position” to the watchdog.
In December 2016, a separate CMA investigation accused Actavis UK, which acquired Auden Mckenzie in June 2015, of charging excessive prices to the NHS for 10mg hydrocortisone tablets following a 12,000 per cent price rise over the course of several years.