CMA penalty decision upheld in major drug market sharing case

30 Apr 2024 11:03 AM

The CAT has unanimously upheld the level of penalty imposed by the CMA for a market sharing agreement relating to 20mg hydrocortisone tablets.

• Accord-UK and Auden Mckenzie have lost their appeal to overturn a £2.8 million fine for illegal market sharing relating to hydrocortisone tablets
• In 2021, the CMA found Auden Mckenzie had broken competition law after it paid off a potential rival not to enter the hydrocortisone market, in order to preserve its ability to increase prices
• CMA said: “This is a life-saving drug relied on by thousands of people to manage conditions such as Addison’s disease”

In a judgment handed down yesterday, the Competition Appeal Tribunal (CAT) found the penalty of £2,798,525 was fair and proportionate. The penalty, which was imposed on Accord-UK – formerly Actavis UK, which took over the Auden Mckenzie business – took into account the seriousness of the agreement in which Auden bought off a potential rival to avoid it competing with its own version of the drug, and preserve Auden’s ability to increase prices.

This follows the CAT’s judgment in September 2023, which unanimously upheld the Competition and Markets Authority’s (CMA) finding that the prices Auden/Actavis UK charged for hydrocortisone tablets between 2008 and 2018 were excessive and unfair, amounting to an abuse of a dominant position. This resulted in fines of almost £130 million.

In its 2021 decision, the CMA also found that Auden/Actavis agreed to make substantial monthly payments to AMCo in exchange for AMCo agreeing not to enter the market independently with its own 10mg hydrocortisone tablets between 2012 and 2016. The CMA fined the parties a total of £106 million, and the parties appealed. The CAT allowed these appeals on a procedural point, and the CMA is seeking leave to appeal that decision from the Court of Appeal.

Juliette Enser, Interim Executive Director of Competition Enforcement at the CMA, yesterday said:

We are pleased that the CAT has fully endorsed our approach to this penalty decision, recognising the serious nature of the market sharing agreement, which led to the imposition of the fine.

This is a life-saving drug relied on by thousands of people to manage conditions such as Addison’s disease – paid for by the NHS, and ultimately tax payers.

Background on the case

• The penalty was imposed as a result of a CMA investigation into the conduct of several pharmaceutical firms: Auden Mckenzie and later Actavis UK (now known as Accord-UK); Waymade; and AMCo (now known as Advanz Pharma).
• In 2021, the CMA found that Auden/Actavis charged the NHS excessively high prices for hydrocortisone tablets from 2008 until 2017 (for the 20mg strength) and until 2018 (for the 10mg strength). The CMA’s findings that these prices were excessive and unfair were upheld in the CAT’s judgment of September 2023.
• The CMA also found that in order to maintain its monopoly position, Auden agreed to make substantial monthly payments to Waymade in exchange for Waymade agreeing not to enter the market independently with its own 20mg hydrocortisone tablets between 2011 and 2015. The CMA imposed a penalty of £2.8 million on Accord-UK and £2.2 million on Waymade.
• Neither Waymade nor Auden/Actavis appealed the finding that they had entered into a market sharing agreement on 20mg hydrocortisone tablets, but Auden/Actavis appealed the CMA’s approach to calculation of its penalty. The CAT has yesterday upheld that penalty in full.

Notes to Editors

1. For media queries, please contact the press office on press@cma.gov.uk or on 020 3738 6460.
2. Actavis UK/Accord-UK took over Auden’s business in 2015 and was liable for Auden’s conduct prior to that date. Accord-UK is therefore solely liable for the penalty of £2,798,525 relating to the 20mg market sharing agreement.
3. Waymade paid its penalty of £2,200,000 for the 20mg market sharing agreement and did not appeal the CMA’s decision.
4. Previous action taken by the CMA in relation to the pharma sector and the fines imposed:

• Paroxetine (2016): £45 million in fines for anti-competitive agreements and abuse of dominance (reduced to £27.1 million on appeal).
• Fludrocortisone (2019): £2.3 million in fines and £8 million redress to the NHS for market sharing.
• Nortriptyline (2020): £3.4 million in fines and £1 million redress to the NHS for illegal arrangements including market sharing and information exchange.
• Liothyronine (2021, upheld by the CAT in August 2023): £101 million in fines for excessive and unfair pricing (reduced to £84 million on appeal).
• Prochlorperazine (2022): £35 million in fines for an illegal arrangement that restricted competition in the supply of prescription tablets.
• Phenytoin (2022): £70 million in fines for excessive and unfair pricing.