There have been further developments in the Competition and Markets Authority (“CMA”) investigation into unfair and excessive pricing for hydrocortisone tablets. The CMA has now issued statements of objection to Accord Healthcare Limited and its parent group Intas Pharmaceuticals Limited embroiling them in the investigation. In December 2016 the CMA investigation first accused Actavis UK, acquired by Accord in January 2017, of excessive price rises of between 9,500% and 12,000% in just a few years. The CMA has also alleged that Actavis entered into anti-competitive agreements with generic manufacturer Concordia for the supply of hydrocortisone.

Background

Hydrocortisone tablets are generally prescribed to those suffering from hormone deficiencies such as sufferers of Addison’s disease. In 2016 the NHS issued around one million prescriptions for the drug. The statement of objections alleges “excessive and unfair” pricing for 10mg and 20mg hydrocortisone tablets. Prior to April 2008, when the tablets were sold by another firm, the NHS was spending around £0.70 per pack for 10mg tablets. This had risen to £88.00 per pack by March 2016. The price rises follow the same process of de-branding (or “genericisation”) that was seen in the Pfizer/Flynn case.

Economic successor

Actavis UK has only been directly involved with the alleged infringements since May 2015 when it acquired Auden MacKenzie. However the statement of objections is seeking to hold Actavis UK liable for the infringements over the whole period stemming back to January 2013. The CMA has applied the concept of the “economic successor” to attach liability to Actavis UK for Auden MacKenzie’s infringements. Essentially this means that where a corporate entity has been acquired its liability for competition law breaches can remain live and transfer to the new parent or successor company.

Joint and several liability

Intas Pharmaceuticals and its subsidiary Accord entered the picture when Accord acquired Actavis in January of this year. The CMA are proposing to find them jointly and severally liable for the alleged infringements in the period of their ownership. The CMA is also seeking to hold former parent company Allergan plc liable in respect of the period that it owned Actavis between 2015 and 2017. Should the CMA investigation find that Actavis has engaged in anti-competitive behaviour the maximum fine could be up to 10% of the annual worldwide group turnover of the business involved meaning both Allergan and Intas could both face not insignificant fines.