Actavis Targeted by U.K. for Raising Drug Price by 12,000%

  • Company broke competition law by raising prices, CMA says
  • Statement comes nine days after record fine for Pfizer

Actavis faces fines for raising the cost of hydrocortisone tablets by more than 12,000 percent, the U.K. antitrust regulator said Friday as it continued a crackdown on excessive pricing in the drug industry.

Actavis "broke competition law by charging excessive and unfair prices in the U.K.," the regulator said in a statement. In one example, The company raised the price of the 10 milligram packs from 70 pence to 88 pounds ($110). Teva Pharmaceutical Industries Ltd., which acquired Actavis for $40.5 billion from Allergan Plc earlier this year, said it will "defend the allegations."

"This is a lifesaving drug relied on by thousands of patients, which the NHS has no choice but to continue purchasing," said Andrew Groves, CMA senior responsible officer. "We allege that the company has taken advantage of this situation and the removal of the drug from price regulation, leaving the NHS -- and ultimately the taxpayer -- footing the bill for the substantial price rises."

The CMA sent Actavis a statement of objections laying out its concerns amid a wider crackdown on unfair drug pricing. On Dec. 7, the CMA fined Pfizer Inc. and Flynn Pharma Ltd. a record amount for abusing their dominant position by charging unfair prices for unbranded versions of the Epanutin anti-epilepsy drug.

Pfizer Fine

The regulator fined Pfizer 84.2 million pounds and Flynn Pharma 5.2 million pounds after they increased prices by as much as 2,600 percent in September 2012. The price increases occurred after Pfizer transferred distribution rights to Flynn, which sold the medicine by its generic name, phenytoin sodium.

Teva, which is already in the process of selling Actavis U.K. to Intas Pharmaceuticals Ltd., said the CMA probe raises broader questions about the regulation of generic medications.

Although the pricing of the Actavis product "under investigation was never under Teva’s effective control, Teva believes that intervention by the CMA in prices for generic medicines raises serious policy concerns regarding the roles of both the CMA and the Department of Health," Teva said. "Generic medicines continue to be an affordable alternative to branded therapies."

A statement of objections can often lead to fines or orders to change business practices. The regulator has the power to fine companies found to have abused a dominant market position up to 10 percent of their annual revenue.

Replacement Therapy

Hydrocortisone tablets are used as the primary replacement therapy for people whose adrenal glands do not produce sufficient amounts of natural steroid hormones, resulting in conditions such as Addison’s disease. The tablets are also used to treat conditions such as arthritis, blood, hormone and immune system disorders, skin and eye conditions, breathing problems, cancer, and severe allergies.

Actavis also increased the price of 20 milligram hydrocortisone tablets by nearly 9,500 percent, resulting in charges to the NHS of 102.74 pounds per pack by March 2016, the CMA said. The NHS had previously paid 1.07 pounds per pack.

Prior to April 2008, the NHS spent about 522,000 pounds a year on hydrocortisone tablets. By 2015, NHS spend on the tablets had risen to 70 million pounds a year.

Steep price hikes have put a string of drugmakers under the microscope in the U.S. with companies like Mylan NV and Valeant Pharmaceuticals International Inc. bearing the brunt of the public outrage. President-elect Donald Trump, who had been cited as a boon to free-market health care, also declared himself an opponent of high drug prices in an interview with Time magazine.

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