CMA overcomes legal challenge to medicine pricing fine
The Competition Appeal Tribunal upheld a decision by the Competition and Markets Authority to fine a pharmaceutical manufacturer £84 million for overcharging the NHS.
The tribunal found that the CMA's decision to fine Advanz for abusing its dominant position in the market for liothyronine tablets – an essential medicine to treat thyroid hormone deficiency – was correct in "all the main elements".
Advanz is the sole supplier of the tablets. According to the CMA, the company increased its prices by over 1,000 per cent, from £20 to £248 per pack, between 2009 and 2017. This resulted in an £84 million fine.
Michael Grenfell, executive director of 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."
In a press release on 8 August, the CMA said:
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.