Drug company fined £2.2m for abusing its dominant position

BMJ 2002; 324 doi: (Published 26 January 2002) Cite this as: BMJ 2002;324:188
  1. Clare Dyer, legal correspondent
  1. BMJ

    A UK drug company must pay a fine of £2.2m ($3m; €3.5m) for abusing its dominant market position to drive out competitors, the competition commission's appeal tribunal ruled last week.

    In its first case the tribunal, set up under the Competition Act 1998, upheld a ruling last March by the director general of fair trading against Napp Pharmaceuticals, Cambridge, makers of MST Continus, a slow release morphine tablet taken by terminally ill patients with cancer. But the tribunal cut the £3.2m fine imposed by the director general to £2.2m.

    The tribunal upheld orders to reduce the price of the drug, limit discounts to hospitals, and pay compensation to the NHS, backdated to May 2001.

    Napp discounted its prices by as much as 90% to hospitals, which are seen as a crucial gateway to the GP market, because most family doctors continue to prescribe drugs given to the patient in hospital.

    The director general of fair trading ruled last March that Napp had supplied the drug to patients in the community at high prices while supplying hospitals at discount levels that blocked competitors. Community prices were typically more than 10 times higher than Napp's hospital prices and up to six times the export price of MST Continus. During this period at least one competitor withdrew from the market.

    The Office of Fair Trading estimated that the action would save the NHS £2m a year.

    Sir Christopher Bellamy, president of the appeal tribunal, said in his ruling: “We regard it as a serious feature of the present case that the product concerned is a pharmaceutical product for the treatment of patients in severe pain. Napp's conduct has in practice tended to limit the choice of prescribing doctors and in some cases to deny their seriously ill patients alternative oral sustained release morphine products.”

    The case, the first brought by the Office of Fair Trading under the Competition Act 1998, resulted from a complaint by Peter Bradley, Labour MP for the Wrekin. He said he started looking into the question after a meeting with a health authority. “My anxiety has been and continues to be that if Napp was making excess profits of £2m on a single drug, how many other cases are there and what is the total cost to the NHS?

    “Napp could be just the tip of the iceberg. If, as they claim, they were only doing what the rest of the industry does, the Department of Health must make an urgent assessment of the extent of this abuse and take decisive action to end it. The savings to the NHS could be very substantial.”

    John Brogden, Napp's managing director, said: “While the tribunal has reduced the fine by £1m, we are nevertheless extremely disappointed by the ruling. The legal and economic issues raised in the Office of Fair Trading's case against us were very complex, and the right answers to some of the issues are far from obvious.

    “The tribunal's ruling takes a very hard line … We are also sure that others will wish to digest the implications for the government's pharmaceutical price regulation scheme.”

    The company has the right to go to the Court of Appeal on matters of law or the size of the fine.

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