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Watchdog accuses Actavis of hiking price of lifesaving drug by 12,000% Drugs firms face fresh questions after Actavis accused of 12,000% price hike
(about 9 hours later)
Pharmaceutical company Actavis is facing accusations from the competition watchdog that it hiked the price of life-saving hydrocortisone tablets by more than 12,000%, sending the annual cost to the NHS spiralling from £522,000 before 2008 to £70m by 2015. Drugs companies are facing renewed questions about the prices they charge the NHS for life-saving medicines after a firm was accused of marking up a tablet by more than 12,000%.
The Competition and Markets Authority said the price rises took place after the patent lapsed on the drug. About 943,000 packets of the tablets – prescribed to people whose adrenal glands do not produce enough steroid hormones, such as those suffering from Addison’s disease – were distributed over the last year. A week after US giant Pfizer was slapped with a record fine of £84.2m for alleged unfair price hikes, the Competition and Markets Authority accused another multinational, Actavis, of ramping up prices for life-saving hydrocortisone tablets from 70p a pack as of April 2008 to £88 by March 2016.
As the CMA set out its reasons why the company had broken competition law, the regulator’s senior responsible officer, Andrew Groves, said: “This is a lifesaving drug relied on by thousands of patients, which the NHS has no choice but to continue purchasing. The treatment is prescribed to people whose adrenal glands do not produce enough steroid hormones, such as those suffering from Addison’s disease. Almost 1m prescriptions were distributed over the last year.
“We allege that the company has taken advantage of this situation and the removal of the drug from price regulation, leaving the NHS – and ultimately the taxpayer – footing the bill for the substantial price rises,” said Groves. The regulator’s senior responsible officer, Andrew Groves, said the price increase was unfair because it is the only available drug on the market. “This is a lifesaving drug relied on by thousands of patients, which the NHS has no choice but to continue purchasing,” he said.
“We allege that the company has taken advantage of this situation and the removal of the drug from price regulation, leaving the NHS – and ultimately the taxpayer – footing the bill for the substantial price rises,.”
Both cases, as well as a previous investigation involving GSK, are currently being challenged by the drugs firms, but a spokesperson for the CMA said three further investigations are under way into the pharmaceutical sector, one of which is looking at another case of unfair pricing.
But, he said, without conducting a sector-wide investigation of the pricing of generic drugs it was difficult to assess the extent of the problem. “There is legislation [being planned] to keep a closer eye on generics and that was partly [as a] result of some of the concerns that have come up from things we have been investigating,” he added.
Drug companies face price controls for as long as their products are protected by patents. As soon as patents expire, drugs go “off-brand” meaning any rivals can develop generic copies. Normally this reduces costs as other players enter the market.
But in these two cases, the lack of substitute products proved costly for the NHS, according to the regulator.
The Pfizer case resulted in the NHS paying about £50m a year extra for its epilepsy medicine over the past four years, according to the CMA, while the Actavis increase cost about £70m extra annually. With other cases pending, it is possible that the cash-strapped NHS has been overcharged several hundreds of millions of pounds altogether over the past few years.
Hydrocortisone tablets went off-brand of 2008. But according to the CMA, Actavis remained the only supplier until last year. Observers say there could be a number of reasons why.
“It is typically a mix of scientific and regulatory and commercial factors that will impact on a decision whether to develop a generic or not,” said Warwick Smith, director general of the British Generic Manufacturers Association (BGMA). He added that if a drug is complicated to make, or there are only a small number of patients taking the medication, companies may chose not to produce the drug.
If upheld, the Pfizer and Actavis cases would clearly show that the market for medicines falls down where the NHS has no alternatives for life-saving treatments.
A spokesperson for the Association of the British Pharmaceutical Industry, the trade body for major pharmaceutical companies condemned such practices saying: “The ABPI has repeatedly said that it does not in any way support or condone the practice of ‘price hikes’ to generic medicines. This position has not changed.”
Actavis was bought by the Israeli pharmaceutical company Teva earlier this year but it is now in the process of selling off the operation to Intas Pharmaceuticals to comply with EU rules. Tevas said it intended to defend the allegations although it said the pricing of the hydrocortisone product had never been under its control.Actavis was bought by the Israeli pharmaceutical company Teva earlier this year but it is now in the process of selling off the operation to Intas Pharmaceuticals to comply with EU rules. Tevas said it intended to defend the allegations although it said the pricing of the hydrocortisone product had never been under its control.
Teva said it brought cost savings to the NHS and was as the UK’s largest generic medicines manufacturer. “Competition from generic medicines saves the NHS in England and Wales £13.5bn per year overall, and Teva medicines account for approximately £3.2bn of this saving,” the company said.
“Although the pricing of the acquired Actavis product (Hydrocortisone) under investigation was never under Teva’s effective control, Teva believes that intervention by the CMA in prices for generic medicines raises serious policy concerns regarding the roles of both the CMA and the Department of Health.”
The watchdog is continuing other investigations into the pharmaceutical sector. The latest allegations come after last week’s £84.2m fine on Pfizer for increasing the cost of an anti-epilepsy drug. The drugs distributor Flynn Pharma was fined £5.2m for charging excessive and unfair prices in the UK for an epilepsy treatment.
Groves said the current findings against Actavis were provisional and that it was too early to conclude there had been a breach of competition law. “The CMA will carefully consider any representations of the parties under investigation before determining whether the law has been infringed,” said Groves.
Actavis – formerly Auden Mckenzie – is facing accusations about the prices of two forms of the hydrocortisone tablets. The CMA said the increase in price to the NHS for 10mg packs rose from 70p in April 2008 to £88 by March 2016 – a 12,000% rise. For 20mg sizes the price rise was 9,500% – increasing to £102.74 per pack by March 2016, compared with £1.07 when the treatment was still branded.
Once medicine and treatments are no longer branded – known as generic medicine – they are no longer subject to price regulation, a move that is usually expected to reduce the cost rather than inflate it.