Prochlorperazine - the latest CMA competition development

Prochlorperazine - the latest CMA competition development

Prochlorperazine - the latest CMA competition development

On the 23 May 2019 the CMA issued a ‘Statement of Objections’ to four pharmaceutical companies - Alliance Pharmaceuticals, Focus, Lexon and Medreich alleging anti-competitive agreements in breach of competition law.  

The CMA alleges that Lexon and Medreich were paid a share of profits earned by Focus on the supply of the anti-nausea tablet Prochlorperazine.  It is alleged that in exchange for the share of profits Lexon and Medreich agreed not to compete with Focus, or the original licence holder Alliance, in the supply of the drug.

The press release suggests themes common to recent excessive pricing and patent settlement cases brought by the Authority. The CMA emphasises apparently dramatic price increases for the drug (around 700%) in the period of the alleged infringement.  It also alleges that payments were made to keep planned competition off the market (Lexon and Medreich had apparently been planning the launch of rival products).  This case is however different from recent CMA competition cases in that the price does not appear to be alleged to be excessive and the alleged market sharing arrangements did not occur in the context of patent litigation, but rather licensing arrangements.  

As with any Statement of Objections the parties now have an opportunity to respond and to seek to persuade the CMA that the activity does not constitute an infringement.  The Statement of Objections is  confidential and the press release therefore provides the only publicly available information about the case.  In such circumstances it is challenging for businesses to draw any conclusions either as to the likely outcome or lessons to learn from this matter.  However, one might anticipate arguments relating to:

- the circumstances in which a licensor can licence a product to a licensee that is an actual or potential competitor;

- the extent to which a licensor is required to make enquiries as to the competitive intentions of a licensee;

- the circumstances in which it is lawful for a potential competitor to choose not to compete and to seek a licence instead; and

- the extent to which any terms of such licence may make the licensing activity lawful or unlawful.

Whatever the outcome, it is advisable for businesses to consider carefully and where there are concerns seek advice prior to entering into any licensing arrangements that confer exclusivity on a party or that are between actual or potential competitors.  

For more information, please contact our competition team here

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