Competition Appeal Tribunal upholds CMA’s pharmaceuticals excess pricing decision

 

 

Competition Appeal Tribunal upholds CMA’s pharmaceuticals excess pricing decision

The Competition Appeal Tribunal (CAT) has ruled that the CMA was correct in its July 2021 decision finding infringements of the Chapter II prohibition of the Competition Act 1998 by Advance Pharma and its parent companies in relation to the supply of a thyroid drug, liothyronine.

The CMA had that Advanz had abused its dominant position by charging excessive prices for supplying 20mcg liothyronine tablets, between 2009 and 2017. The CMA found that the prices for the packs increased by 1,110% from £20 in 2009 to £248 in 2017.  The CMA imposed total fines of over £100 million, of which Advanz Pharma was liable for over £40 million.

The CAT upheld the CMA’s findings on infringement.  It dismissed all the appellants’ arguments that that the CMA had erred in its assessment using a costs-plus methodology and that the CMA should have used alternative comparators in determining that the prices charged were unfair.

The CAT also concluded that there was no error in the CMA’s assessment that there was no objective justification for the price increases and that the purpose of the pricing was to exploit the lack of regulatory and competitive constraints, resulting in a significant and adverse impact on pricing to the NHS.  The CAT reject the appellants’ submissions that there had been acquiescence by the NHS in the price increases.

The CAT rejected most of the challenges to the CMA’s calculation of penalties but concluded that in this case there was no basis to impose an uplift for deterrence.  It therefore reduced the fine imposed on Hg Capital to £6.2 million and on Cinven to £37.1 million.   Advanz Pharma received no further reduction as its fine was already reduced by the statutory cap.

The judgment is likely to clear the ground for the NHS to seek damages.

Hg Capital LLP, Cinven Capital Management (V) General Management Limited and others and Mercury Pharmaceuticals Limited and others v Competition and Markets Authority [2023] CAT 52