United Kingdom - Competition Appeal Tribunal Upheld CMA's Decision to Fine Advanz and Others for Excessive and Unfair Pricing of Critical Medicine
- 29/08/2023
- News
On 8 August 2023, the UK Competition Appeal Tribunal (CAT) unanimously upheld a decision of the UK Competition and Markets Authority (CMA) which in July 2021 had imposed fines totalling more than £101 million on Advanz Pharma (Advanz) and two previous private equity owners, Cinven and HgCapital, for charging excessive and unfair prices for liothyronine tablets which are indicated for the treatment of hypothyroidism (see, Van Bael & Bellis Life Sciences News and Insights of 29 July 2021). Advanz was found to have abused its dominant position in the market for liothyronine tablets in the UK.
The appellants challenged the CMA decision on several substantive grounds (they also contested the fines). According to the appellants,
- the CMA made errors in assessing the relationship between the appellants’ prices and their costs (the “cost plus” assessment);
- the CMA erred in failing to grant sufficient weight to three comparators, which the appellants characterised as the “real-world” evidence of what would have constituted a fair price for liothyronine tablets; and
- Advanz lacked dominance because the pricing and payment authorities, including the National Health Service (NHS), exerted countervailing buyer power to constrain prices during the infringement period. Additionally, the buyers had supposedly acquiesced in the prices which Advanz charged for liothyronine tablets.
In applying the excessive pricing test developed in 1978 by the Court of Justice of the European Union in United Brands, the CAT dismissed all of these grounds, even though it reduced the fines imposed on Cinven and HgCapital. Importantly, the CAT found that the significant price increases which Advanz had implemented between 2009 and 2017 reflected a deliberate strategy to exploit the lack of regulatory and competitive constraints on Advanz and had a profound impact on the NHS.
