CMA Launches Inquiry Into Unexpected Price Hikes Of Generic Drugs

According to a recent report, Competition and Markets Authority (CMA) will now begin an inquiry against the unregulated and unexpected price hike that has been seen in the generic drugs manufactured by pharmaceutical companies, causing an unprecedented increase in the spending of already struggling National Health Service (NHS).

These generic drugs include fusidic acid (antibacterial) and cyclizine (anticholinergic). Bacterial conjunctivitis is commonly treated with chloramphenicol (prescription cost £2) and fusidic acid (prescription cost £29.06) with the former pending decision from regulatory authorities regarding its side effects. There is almost 25% chance of acquiring viral conjunctivitis from household contact. Bacterial conjunctivitis can occur in 30 out of every 0.1 million people.

National Health Service England, founded on July 5, 1948, is the oldest single-payer healthcare system funded by the public. According to the laws of NHS, free services are provided to the public for treating emergencies and infectious diseases. Many exceptions and exemptions also exist according to which certain people are entitled to free of cost prescription as well.

NHS prescription charge (last updated in April 2016) equals to a fair amount of £8.40 per item in a prescription. People from low-income class, people above sixty years of age, children below sixteen years (extended to nineteen years if they are getting a full-time education), and patients being treated for enlisted medical conditions are exempted from this charge.

Recently, NHS has faced a sudden surge in the prices of basic medicine. A Canadian Manufacturer Concordia Healthcare has spiked the price of fusidic acid eye drops from £2.09 (May 2013) to £29.06 (April 2016). A 14-fold price increase is paid for by the NHS which points the fingers towards one of many flaws deteriorating Britain’s finest healthcare system.

There is a working system in place in the UK in order to control the cost of branded medicines to NHS. But, in the case of generic drugs, no such measures have been taken as the competition in the market serves the purpose of the regulatory domain. NHS, sticking to its rules, opts for the cheaper medicine.

In the case of fusidic acid, the rapid spiking of the cost has been able to make its way to the market because of the fact that AMCo (manufacturer of Fusidic Acid 1% Viscous Eye Drops) has almost no competition in the generic medicine sector. Fusidic acid was being produced by Amdipharm in the UK since the beginning before it was discontinued. Since then, AMCo (now Concordia International) is the sole manufacturer of the drug for many years.

NHS posts its prescribing data of all general physicians in an anonymous format on openprescribing.org, and makes it accessible to the public. The sale of fusidic acid eye drops has seen a decline since AMCo started producing it. According to the recent statistics of spending of NHS on fusidic acid, a dramatic increase of five to six times can be observed despite the decrease in sales.

A similar trend of decreased sales and increased spending can also be observed from another drug, cyclizine, for which the price has tripled from the original amount of a few hundred pence. There are many examples of other such drugs circulating in the UK while costing a lot to the NHS.

AMCo, after being bought by Concordia Healthcare in September 2015, saw an increase in its revenue by almost 276 percent which can be attributed to the price hikes that it has managed to sneak in since then. NHS has to utilize and employ stringent strategies to make sure that they are not overcharged by the drug manufacturers. According to an NHS spokesperson: “The recent public backlash against price gouging in various countries including the United States has underlined the need for continuing vigilance on this issue.”

According to a statement issued by Concordia International, their pharmaceutical products’ cost also compensates for the payments to the pharmacists as well. It also states that the number of medicines provided by Concordia International help in saving a lot of revenue on behalf of NHS. Further adding to the statement AMCo’s annualized weighted average selling price was also issued which was £4.90, while the payment by NHS in terms of standard adult prescription is £8.40 (as of April 2016).

Since the report of unregulated price hikes surfaced, the Competition and Markets Authority (CMA) has initiated an inquiry encompassing all the pharmaceutical manufacturers in violation of the competition laws. A violation of the competition laws by any manufacturer can lead to a fine up to 10% of the turnover.

The CMA also issued a statement regarding this, “The investigation relates to suspected unfair pricing by way of charging excessive prices in the supply of certain pharmaceutical products, including to the National Health Service.” CMA initiated this inquiry after being called upon by the officials who took notice of the report published in a credible news journal.

The report shed light on the unrealistic price hike of almost 32 drugs which have shown price increase of 1000% over the last half decade. The name of Concordia International surfaced after the company revealed that it is one of the companies that are currently being investigated.

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