‘Highly concerning’: Hydrocortisone manufacturers' £100m fine overturned
Manufacturers that hiked hydrocortisone prices by 10,000% and paid off competitors will not have to pay “nearly £100m of fines” after a successful appeal, the Competition Appeal Tribunal (CAT) has ruled.
The CAT’s decision to overturn record fines for “flagrantly anti-competitive” behaviour by hydrocortisone manufacturers is “fundamentally misconceived”, the Competition and Markets Authority (CMA) said last week (March 8).
In July 2021, the CMA issued a total of more than £260m in fines against hydrocortisone manufacturers Auden Mckenzie and Actavis UK – now known as Accord-UK – as well as their parent companies and potential competitors for “abuse of dominance” and “collusion”.
At the time, the CMA found that the firms “exploited the fact that de-branded drugs are not subject to NHS price regulation” and increased the price of 10mg and 20mg hydrocortisone tablets by “over 10,000%” between April 2008 and March 2016.
Accord appealed the decision but in September, the CAT “unanimously upheld” the CMA’s findings on price hiking and agreed to impose fines of almost £130m - the “highest ever” penalties upheld by the CAT.
But now, following a successful appeal, the CAT decided to “overturn nearly £100 million of fines” for a market sharing agreement between Auden/Actavis UK and competitor AMCo/Advanz on Friday (March 8), according to the CMA.
This does not affect the £129m fine levied against Actavis UK and its current and former parents for excessive and unfair pricing, which still stands, the CMA clarified.
In documents released last week, the CAT said that the CMA failed to “use the powerful process of cross-examination” on witnesses including former Advanz chief executive John Beighton, “fatally” undermining its judgment.
The CAT admitted that had the CMA properly cross-examined Advanz witnesses it would have remained “completely comfortable with the terms and outcome” of its initial decision.
CMA “will be appealing”
But the CMA said that the CAT made its decision based on “a fundamentally misconceived procedural point” that “overlooks critical evidence…that was put to Mr Beighton over two days of cross-examination”.
CMA chief executive Sarah Cardell said that “the impact of this judgment is highly concerning”.
“We will be appealing and remain determined to see this case through,” she added.
She stressed that the initial fines were imposed following findings that the firms “engaged in a market sharing agreement that denied the NHS potential savings” for the “essential medicine”.
The CAT and Advanz declined to comment, while Accord had not responded by the time of publication.
Exploiting the NHS
In 2021, the CMA found that the price paid by the NHS for a pack of 10mg tablets rose from 70p to £72 over eight years, netting Auden/Actavis “at least” £145m in “illegal profit”.
Annual NHS spending on hydrocortisone – which is relied on by tens of thousands of people to treat life-threatening conditions - rose from around £0.5m to more than £80m, CMA executive director of enforcement Michael Grenfell said in September.
The CMA also revealed in 2021 that Auden had paid potential competitor Waymade a monthly sum not to enter the market with its own versions of hydrocortisone tablets.
It found that Auden and later Actavis UK had also “colluded with another potential competitor” AMCo – now known as Advanz Pharma - to “buy off” competition.
In 2021 and in September, a spokesperson for Accord Healthcare Ltd told C+D that the company was “very disappointed” by the decision.
