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The Actuary The magazine of the Institute & Faculty of Actuaries

Drug company accused of overcharging the NHS

The Competition and Markets Authority (CMA) have accused the pharmaceutical company Actavis UK of breaking the law by charging excessive prices to the NHS.

Several investigations into the pharmaceutical sector ©iStock
Several investigations into the pharmaceutical sector ©iStock

Their 10mg hydrocortisone tablets have increased in price by over 12,000% since 2008, while the price of 20mg hydrocortisone pills grew by nearly 9,500% over the same period.

The medication is used to treat Addison’s disease, which can be life threatening, with the NHS paying £70m a year for the tablets in 2015, significantly more than the £522,000 it was paying for them prior to 2008.

CMA senior responsible officer, Andrew Groves, said: “This is a lifesaving drug relied on by thousands of patients, which the NHS has no choice but to continue purchasing.

“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’s findings are provisional and no conclusion should be drawn at this stage. We will carefully consider any representations of the parties under investigation before determining whether the law has been infringed.”

The competition watchdog has a number of other ongoing investigations into the pharmaceutical sector, with the suppliers Pfizer and Flynn Pharma being fined nearly £90m last week for excessive pricing of the anti-epilepsy drug phenytoin sodium.

While in February this year the CMA fined several pharmaceutical companies a total of £45m for anti-competitive agreements and conduct in relation to the supply of the anti-depressant drug paroxetine.

The latest case of overcharging comes after it was reported last month that the financial performance of NHS bodies had worsened by more than three times since 2014-2015, with there being an estimated £22bn ‘black hole’ forecast between patient’s needs and resources by 2020.

The government has said that they intend to plug this gap through efficiency savings, however analysis by the Health Foundation earlier this year found that only £1bn of savings were made in 2015.

The foundation’s director of research and economics, Anita Charles, said: “The health system is substantially off-target with its efficiency plan.

“At its heart this reflects fundamental weakness in the approach to efficiency in the NHS – too much reliance on one-off savings.

“What is now crucial is a comprehensive plan with clear accountability for how these savings can be achieved in reality.

“Patients and the public also need assurance that these savings will be genuine efficiencies and not simply reductions in quality.”