Tribunal upholds £84 million fine on Advanz Pharma, PE firms over drug price inflation

Advanz Pharma, alongside London-based private equity firms Cinven and HgCapital, is collectively confronted with an £84 million penalty for inflating the price of the thyroid drug by over 1,000 per cent, soaring from £20 to £248 per package over an eight-year period.

The Competition Appeal Tribunal endorsed 'all key aspects' of the Competition and Markets Authority's verdict on the companies' culpability in the case, the CMA has said.

Advanz stood as the sole supplier of liothyronine tablets, essential for treating thyroid hormone deficiency, with the cost of a packet of these tablets surging over 12-fold between 2009 and 2017.

Although Advanz Pharma currently possesses ownership of the company, its former owners, PE firms Cinven and HgCapital, also bear responsibility for the imposed fine, the CMA said.

“NHS annual spending on the tablets in 2006, the year before the implementation of the strategy, was £600,000, but by 2009 had increased to more than £2.3 million and jumped to more than £30 million by 2016,” Britain’s competition watchdog said.

The CMA said that the tribunal upheld its determination that Advanz had exploited its dominant position. Advanz had charged “excessive and unfair prices”, it said.

In particular, “the Tribunal found that the price increases were part of a deliberate strategy to exploit the lack of regulatory or competitive constraints and resulted in a significant impact on the NHS.”

The Tribunal dismissed all of the appellants’ grounds of appeal on liability, the CMA added.

However, the tribunal reduced the overall fine for the three businesses from around £101 million to £84.2 million. Advanz Pharma will pay £40.9 million, Cinven £37.1 million and HgCapital £6.2 million, the tribunal decided.

“We are delighted that the Competition Appeal Tribunal has unanimously upheld the CMA’s infringement findings,” said Michael Grenfell, executive director of enforcement of CMA. “This landmark judgment reinforces the need for companies to think carefully about how they set prices and paves the way for the NHS to seek compensation.”

“The CMA will continue to crack down on companies which abuse their market power in ways that harm people and the wider economy,” he added.

Earlier, CMA had fined Pfizer and Flynn £63 million and £6.7 million each for alleged competition law breaches and unauthorized profits from an anti-epilepsy medication's sales.