The UK’s competition authority has provisionally accepted a £10.1 million settlement from Aspen over an agreement that prevented the entry of a competing version of the drug fludrocortisone.
The Competition and Markets Authority today published its intent to accept commitments that the multinational pharmaceutical group offered in July. The enforcer suspected Aspen had broken competition law by paying rivals to stay out of the market, so it could remain the sole supplier of the drug.
The National Health Service pays for the drug, which is only available on prescription and used primarily to treat Addisons’s Disease.
The binding commitments outline that Aspen must pay its customer, the NHS, £8 million without the government launching court proceedings. Aspen must also admit it was part of an “illegal, anticompetitive agreement” and ensure that there are at least two suppliers of fludrocortisone in the UK.
Aspen will additionally pay a maximum fine of £2.1 million, if the CMA concludes that competition law has been broken.
Andrea Coscelli, the CMA’s chief executive, said that Aspen has agreed to pay the NHS so the government can save the “time and expense of seeking damages in court”.
This is the first time a CMA investigation will secure an agreed payment to the NHS, and the first time the competition agency has used its commitments procedure to obtain compensation for a customer.
“These arrangements left Aspen as the sole supplier of fludrocortisone, with the ability to set prices without facing any competition,” the authority said. The enforcer is investigating two other companies in relation to this arrangement.
The authority launched its investigation of Aspen in October 2017 and said today that it is concerned the agreement between Aspen and its generic rivals “continues to have effects on the conditions of competition” in the market for the supply of fludrocortisone acetate tablets in the UK.
The CMA is investigating six other drugs. In 2017 the authority accused Concordia of overcharging the NHS and increasing the price of an essential drug by 6,000%. In June, the watchdog sent a statement of objections to Auden Mckenzie and Pfizer subsidiary King over alleged market-share agreements for the supply of nortriptyline.
The enforcer also accused Advanz Pharma, Morningside Healthcare and Alliance Healthcare of entering market-share agreements for the supply of antibiotic Nitrofurantoin.
The £2.1 million fine reflects Aspen’s “willingness to address the concerns” raised by the authority, the company said. The company added that the commitments do not constitute an admission of wrongdoing.
Pat Tracey, a partner at Bristows in London, said that the CMA has “made no secret of the fact that the pharmaceutical sector is a priority for enforcement” and it can make a “direct link between suspected anti-competitive conduct and costs to the NHS and taxpayer”.
“This settlement is a little unusual, because it is the first time a CMA investigation has led to the offer of a direct payment to the NHS,” Tracey said. She added that it is “interesting” that the authority notes that the NHS can seek further damages if it considers doing so to be appropriate.
Robert Vidal, a partner at Pinsent Masons, said it will be “interesting to see if other parties to this or other CMA investigations will seek a similar resolution”.
“The NHS is often the main victim – and largest potential damages claimant – in UK-based anticompetitive conduct involving prescription medication,” Vidal added.
Anna Morfey, a partner at Hausfeld in London, said early settlements are “attractive in the right circumstances”, but are inevitably “at a discount”.
“It will be interesting to see how the CMA and the NHS approach the issue of compensation from the other parties to the alleged infringement,” she added.
The European Commission launched an investigation of Aspen in May 2017 over suspected excessive pricing of cancer medicines. The investigation remains ongoing.
The enforcer is required to consult interested parties before accepting commitments and will decide whether to accept Aspen’s commitments after stakeholders have responded by 2 September. The CMA said that it has “reached the provisional view” that the commitments offered by Aspen will address its competition concerns.
Counsel to Aspen
Partner Ros Kellaway in London assisted by Elizabeth Coleman and Greg Hayes