UK court upholds CMA findings on excessive hydrocortisone pricing

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UK court on hydrocortisone pricing

Highlights

The Court of Appeal upholds CMA and Competition Appeal Tribunal findings that Auden Mckenzie and Actavis UK charged excessive and unfair prices for hydrocortisone tablets between 2008 and 2018.
The CMA imposed penalties totalling £266 million in July 2021 for excessive pricing and anti-competitive agreements, though the appeals court orders the penalty element to return to the CAT for reconsideration.
All core infringement findings, including excessive and unfair pricing and market-sharing abuses, against Auden Mckenzie and Actavis UK remain upheld on appeal, with penalty review ongoing.

Appeal ruling backs decade-long pricing case

As reported by GOV.UK, the Court of Appeal has ruled that the Competition and Markets Authority and the Competition Appeal Tribunal were right to conclude that Auden Mckenzie and Actavis UK charged excessive and unfair prices for hydrocortisone tablets between 2008 and 2018.

The court dismisses the companies' appeals against the CAT judgment on the infringements, saying none of their grounds of appeal comes close to displacing the earlier conclusions. The case concerns a medicine used to treat serious conditions including Addison’s disease, with the CMA previously finding that the companies abused a dominant position in the market.

After Auden Mckenzie acquired the licences for hydrocortisone tablets in 2008, prices began to rise sharply. Actavis UK, which took over Auden’s business in 2015, continued the increases, while the CMA says the higher prices do not reflect increased costs or new investment in a drug first introduced in 1955.

The regulator also found that when rival companies started developing their own hydrocortisone tablets, Auden and Actavis bought them off, delaying competition that could have lowered prices. Although other firms later entered the market, Actavis UK retained enough market power to continue charging excessive and unfair prices, according to the findings upheld on appeal.

Penalty review continues as NHS impact remains in focus

In July 2021, the CMA imposes penalties totalling £266 million on Auden Mckenzie, Actavis UK and related parties, and also finds anti-competitive agreements with competitors Waymade and AMCo. In 2023, the CAT rejects the companies' appeals on the excessive pricing infringements and upholds the penalties, subject to a £26 million reduction for a former parent company for a period when it did not control the business.

The Court of Appeal now decides that the appeals on penalties should return to the CAT for reconsideration, not because it accepts the companies' arguments, but because it finds the tribunal did not properly address them. That means the penalty element of the case is re-heard, even as the core infringement findings remain upheld.

Juliette Enser, Executive Director for Competition Enforcement at the CMA, says the ruling shows the authority was right to act against firms exploiting the NHS through excessive and unfair pricing of a lifesaving medicine. The latest judgment also follows a separate Court of Appeal ruling in favour of the CMA on a market-sharing finding, leaving all of the regulator’s infringement findings against the firms upheld on appeal.

The FRC fine against EY over its audit of Made.com’s 2021 accounts highlighted tougher UK enforcement of audit standards, focusing on shortcomings in the going concern assessment and work on a deferred tax asset. Our earlier article noted the regulator’s view that EY did not sufficiently challenge management forecasts and models, increasing the risk that investors could have relied on financial statements that did not fully reflect the company’s financial position before its 2022 collapse.

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