Drug firm fined for huge price rise that hit NHS

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Woman undergoing a thyroid scanImage source, Science Photo Library

A drug company that increased the price of a crucial thyroid remedy more than 10-fold has prompted fines of more than £100m by the competition watchdog.

Advanz pushed up the price of thyroid tablet packs from £20 in 2009 to £248 in 2017, making the drug unaffordable for the NHS.

It "exploited a loophole enabling it to reap much higher profits", the Competition and Markets Authority said.

The fine applies to Advanz and two private equity firms.

The CMA said its latest fine sent "a clear message" to the pharmaceutical sector that breaking the law would not be tolerated.

It said an investigation had shown that from 2009 until 2017, Advanz charged excessive and unfair prices for supplying liothyronine tablets, which are used to treat thyroid hormone deficiency.

"They achieved this because liothyronine tablets were among a number of drugs that, although genericised, faced limited or no competition and therefore could sustain repeated price increases," the CMA said in a statement.

But a spokesman for Advanz said: "We utterly disagree with the CMA's decision on the pricing of liothyronine tablets and will be appealing.

"At all times, Advanz Pharma acted in the interest of patients, investing significantly to keep this medicine on the market to the specifications required by the Medicines and Healthcare products Regulatory Agency (MHRA)."

Advanz Pharma specialises in complicated, difficult-to-manufacture drugs that are no longer protected by patents. Anyone can make them, but because they are more complex than normal medicines, most generic drug makers choose not to.

This specialisation, the Advanz website boasts, "provides essential cost-savings to the NHS and wider European healthcare". The Competition and Markets Authority's investigation found another motivation, at least when it came to the supply of one type of thyroid tablets, which contain the chemical liothyronine, to the NHS.

From 2007, the company adopted a deliberate "price optimisation" strategy, which meant exploiting these niche products to drive up prices.

The increases were staggering - 6,000% over a nine-year period - and led eventually to the NHS dropping the drug from its purchase lists altogether. This left patients who suffered from thyroid deficiency and relied on liothyronine tablets - rather than the more common levothyroxine tablets - with the choice of giving up their treatment or having to buy their own tablets at great expense.

Advanz itself was directly fined £40.9m. Private equity firms HgCapital and Cinven, which were previously owners of the businesses now forming part of Advanz, were fined £8.6m and £51.9m respectively.

Michael Grenfell, executive director for enforcement at the CMA, told the BBC that the decision to push up the price of the drug had had "a real human cost".

"The NHS simply wasn't able to afford it on the scale that was needed," he said.

He added that a number of drug companies were "engaged in anti-competitive practices that have racked up expenses for the NHS".

Prior to Advanz lifting prices, the NHS spent £600,000 on the tablets in 2006.

Just three years later, that had risen to more than £2.3m and by 2016, the CMA said the NHS was paying £30m for the drug.

The CMA said that Advanz's decision to increase the price of the treatment was "not driven by any meaningful innovation or investment, volumes remained broadly stable, and the cost of producing the tablets did not increase significantly".

As well as imposing a substantial fine, the CMA said its decision will also make it "easier for the NHS to seek compensation for the firms' behaviour, by way of damages, should it choose to do so".

The thyroid gland makes hormones - called T4 and T3 - that affect things like heart rate and body temperature. Some people have an underactive thyroid and need to take drugs to boost their hormone levels.

Most patients with hypothyroidism - the medical name for symptoms caused by an underactive thyroid - take a drug called levothyroxine or T4.

But some say they feel better if they take a different, more expensive thyroid drug called liothyronine or T3.

T4 is the inactive version of T3 - the body needs to convert it into T3, which might explain why some people say they benefit from liothyronine.

But prescribing it remains somewhat controversial because of the high cost and limited research to prove its worth.

Guidelines recommend T4 as standard, but do not rule out people being prescribed T3. With more manufacturers now making and supplying T3, the cost is going down.

This is the second time this month that the CMA has taken action against excessive price rises imposed by pharmaceutical firms.

Two weeks ago, it imposed fines of more than £260m after finding that Auden Mckenzie and Actavis UK (now known as Accord-UK) "charged the NHS excessively high prices" for hydrocortisone tablets for almost a decade.

At the time, CMA chief executive Andrea Coscelli said the NHS was at one point being charged more than £80 for a single pack of tablets that had previously cost less than £1.

He added that the fine served as "a warning to any other drug firm planning to exploit the NHS".