The Government has accused two English pharmaceutical firms of trying to illegally make millions of pounds from the NHS.
Medicine suppliers Auden Mckenzie and Waymade allegedly set up an agreement to inflate the price of a life-saving steroid.
The Competition and Markets Authority today claimed Auden Mckenzie paid Waymade to not sell certain tablets so it could demand a higher price from the NHS.
As a result, the cost to the health service for 20mg hydrocortisone tablets reportedly almost doubled from £46 to £90 for a single pack of 30.
The CMA revealed the results of its investigation today and the companies could be fined more than £1million each if found guilty.
Waymade has denied the claims and Teva Pharmaceutical Industries, the parent company of Auden Mckenzie, said it intends to ‘defend the allegations vigorously’.
Auden Mckenzie is believed to have paid Waymade not put its own 20mg hydrocortisone tablets on the market.
This meant the former, which is registered in Barnstaple, Devon, became the sole supplier and could charge the NHS higher prices because the health service couldn’t get the drug elsewhere.
The arrangement constitutes ‘anti-competitive’ behaviour, and meant NHS spending on hydrocortisone rose from £1.7m to £3.7 per year between 2011 and 2015, the CMA said.
Hydrocortisone is a steroid used to treat a wide range of health problems.
The pills in question are prescribed to people with Addison’s disease, a rare disorder in which the body doesn’t produce the right amount of hormones.
This causes fatigue, weakness, dizziness and fainting, and is usually medicated with lifelong hydrocortisone therapy – without the drug patients can enter an adrenal crisis which can interfere with breathing, cause vomiting and even kill people.
‘Hydrocortisone is a lifesaving drug for those suffering with Addison’s Disease in the UK,’ said Michael Grenfell, the CMA’s executive director for enforcement.
‘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.
‘The CMA has today provisionally found that Auden Mckenzie and Waymade broke competition law through Auden Mckenzie paying its rival to stay out of the market.’
The CMA found Waymade, registered in London, prepared to start selling the tablets in 2011 but did not follow through for a further four years in exchange for monthly payments from Auden Mckenzie.
And it said the company allowed Waymade to sell Auden Mckenzie-made smaller 10mg pills and only charged the company £1 per pack instead of £32.
The companies will be allowed to put their side of the story forward before the CMA makes its final ruling.
But if they are found to have broken the law they could both be fined up to 10 per cent of their annual turnover – which could be seven-figure sums for both.
According to Companies House, in 2017 Auden Mckenzie (Pharma Division) Limited had a turnover of £11.8million, while Waymade plc’s turnover for the same year was £12.2m.
Waymade has denied the claims and said it intends to fight back.
A spokesperson for the firm said: ‘Waymade will explain to the CMA that the CMA is wrong to find that it was ready to enter the market with its own 20mg product in May 2011.
‘This product was developed as quickly as possible and Waymade had no incentive to delay and has expert evidence to demonstrate this.
‘During the period Waymade bought 20mg hydrocortisone from Auden McKenzie and sold it to third party wholesalers and retail pharmacists but the prices quoted by the CMA are prices charged by wholesalers to the NHS and bear no relation to Waymade’s prices.
‘Waymade’s conduct did not impact the cost to the NHS either before or after Waymade entered the market with its own product.
‘Waymade sold its authorisation for the 10mg product two weeks after it obtained it. It is unclear what the CMA alleges took place in that two weeks.’
A spokesperson for Teva, the parent company of Auden Mckenzie said: ‘Teva confirms that one of its UK subsidiaries has been notified of allegations of anti-competitive conduct set out in a Statement of Objections (SO) issued by the UK Competition & Markets Authority (CMA).
‘The allegations relate to historic conduct by a company named Auden McKenzie, which was bought by Actavis prior to Teva’s acquisition of that company.
‘Neither the product concerned nor Actavis UK were at any time controlled by Teva.
‘The purpose of the SO is to set out the CMA’s preliminary views, which allows addressees to exercise their rights of defence and respond to the CMA’s allegations.
‘The SO does not prejudge the final outcome of the case. Teva is reviewing the SO and intends to defend the allegations vigorously.’