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UK competition authorities have accused a Canadian drugmaker of abusing its dominant position to overcharge the National Health Service by ramping up the price of an essential thyroid drug more by more than 5,500 per cent, as the regulator steps up its efforts to fight so-called “price gouging” across the pharmaceuticals sector.

Competition and Markets Authority chief executive Andrea Coscelli said Concordia Healthcare was forcing the NHS and UK taxpayers “to pay over the odds for important medical treatments”.

The NHS spent more than £34m on liothyronine tablets last year, compared to £600,000 in 2006. The average price paid per pack rose from £4.46 to £258.19, while the company’s production costs remained “broadly stable”.

Concordia’s drug is one of few suitable treatments for some sufferers of hypothyroidism, a condition caused by a hormone deficiency that can lead to depression, tiredness and weight gain.

Compared to the United States – where the president has accused drugmakers of “getting away with murder” by charging high prices for many drugs – the UK has stricter controls over pricing for most treatments. However, there is less regulation in the market for generic off-patent drugs, where competition – in theory – should keep prices low. Liothyronine was “de-branded” in 2007, allowing Concordia to increase the price.

Concordia said the CMA is also investigating its pricing of two further products, but one has been “put on a slower investigative track”, while the other is currently “not an administrative priority” for the CMA.

The company, which specialises in niche generic medicines where it faces little competition, has been criticised for similar practices in the past. Its AMCo division raised the price of one treatment for bacterial conjunctivitis 14-fold shortly after acquiring the product, while the price of another ear drop increased fivefold over a three-year period.

The company said:

We do not believe that competition law has been infringed. The pricing of liothyronine has been conducted openly and transparently with the Department of Health in the UK over a period of 10 years. Over that time, significant investment has been made in this medicine to ensure its continued availability for patients in the UK, to the specifications required by the Medicines Healthcare products Regulatory Agency in the UK.

The CMA’s statement of objections was also addressed to Cinven and HGCapital, the private equity groups from which Concordia acquired its international segment in 2015. Cinven declined to comment. HGCapital could not be reached for comment by publication time.

The CMA’s Mr Coscelli said:

At this stage in the investigation, our findings are provisional and there has been no definitive decision that there has been a breach of competition law. We will carefully consider any representations from the companies before deciding whether the law has in fact been broken.

If the watchdog concludes that the companies did breach competition law, it may impose a fine of up to 10 per cent of annual worldwide group turnover.

The CMA has been ramping up pressure on pharmaceutical groups over the last few years. Last year it leveled its largest ever fine against Pfizer for unfairly raising the price of a drug used to treat epilepsy, while a number of groups including GlaxoSmithKline were charged £45m for conspiring to reduce competition for one of GSK’s antidepressants.

The regulator is currently pursuing a further seven investigations into drug pricing and pharmaceutical competition issues, including a separate probe into Concordia’s behaviour with regards to another drug.

Concordia is accused of accepting incentives from the UK arm of Actavis to discourage it from introducing its own version of a treatment for problems with adrenal glands such as Addison’s disease, allowing Actavis to keep prices artificially high.

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