After Pfizer, Actavis accused of hiking drug price by 12,000%

Drugs companies are facing renewed questions about the prices they charge the UK's National Health Service for life-saving medicines after drug firm Actavis was accused of marking up a tablet by more than 12,000 per cent.

A week after US giant Pfizer was slapped with a record fine of £84.2 million for alleged unfair price hikes, the Competition and Markets Authority accused Actavis, another multinational, of ramping up prices for life-saving hydrocortisone tablets from 70p a pack as of April 2008 to £88 by March 2016.

The treatment is prescribed to people whose adrenal glands do not produce enough steroid hormones, such as those suffering from Addison's disease. Almost 1 million prescriptions were distributed over the last year.

The regulator's senior responsible officer, Andrew Groves, said the price increase was unfair because it is the only available drug on the market. ''This is a lifesaving drug relied on by thousands of patients, which the NHS has no choice but to continue purchasing,'' he said.

''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.''

Both cases, as well as a previous investigation involving GSK, are currently being challenged by the drugs firms, but a spokesperson for the CMA said three further investigations are under way into the pharmaceutical sector, one of which is looking at another case of unfair pricing.

But, he said, without conducting a sector-wide investigation of the pricing of generic drugs it was difficult to assess the extent of the problem. ''There is legislation [being planned] to keep a closer eye on generics and that was partly [as a] result of some of the concerns that have come up from things we have been investigating,'' he added.

Drug companies face price controls for as long as their products are protected by patents. As soon as patents expire, drugs go ''off-brand'', meaning any rivals can develop generic copies. Normally this reduces costs as other players enter the market.

But in these two cases, the lack of substitute products proved costly for the NHS, according to the regulator.

The Pfizer case resulted in the NHS paying about £50 million a year extra for its epilepsy medicine over the past four years, according to the CMA, while the Actavis increase cost about £70 million extra annually. With other cases pending, it is possible that the cash-strapped NHS has been overcharged several hundreds of millions of pounds altogether over the past few years.

Hydrocortisone tablets went off-brand of 2008. But according to the CMA, Actavis remained the only supplier until last year. Observers say there could be a number of reasons why.

''It is typically a mix of scientific and regulatory and commercial factors that will impact on a decision whether to develop a generic or not,'' said Warwick Smith, director general of the British Generic Manufacturers Association (BGMA). He added that if a drug is complicated to make, or there are only a small number of patients taking the medication, companies may chose not to produce the drug.

A spokesperson for the Association of the British Pharmaceutical Industry, the trade body for major pharmaceutical companies condemned such practices saying, ''The ABPI has repeatedly said that it does not in any way support or condone the practice of 'price hikes' to generic medicines. This position has not changed.''

Actavis was bought by the Israeli pharmaceutical company Teva earlier this year but it is now in the process of selling off the operation to Intas Pharmaceuticals to comply with EU rules. Tevas said it intended to defend the allegations although it said the pricing of the hydrocortisone product had never been under its control.