Four Pharmaceutical Companies and Competition Law

The Competition and Markets Authority (CMA) has issued a statement of objections claiming that the cost of a valuable drug was driven up by four pharmaceutical companies agreeing not to compete with one another.

The drug, Prochlorperazine, is used to combat nausea and is often prescribed to cancer patients who have chemotherapy.  The CMA has reported that the annual cost of Prochlorperazine for the NHS rose from £2.7 million in 2014 to £7.5 million in 2018.

The rise appears to be due to two agreements across the four companies, Alliance Pharmaceuticals, Focus, Lexon and Medreich.  The CMA alleges that both of these agreements broke competition law.

Ann Pope, CMA Senior Director of Antitrust, said: “Agreements where a company pays a rival not to enter the market can lead to higher prices and deprive the NHS of huge savings that often result from competition between drug suppliers.

The NHS should not be denied the opportunity of benefitting from an increased choice of suppliers, or lower prices, for important medicine.”

Economics applicants can consider the role of competition in our economic structure and the problems that can be created when companies avoid competition, or a single company monopolises the market.   Law applicants might be interested in further researching competition law.