Essential Pharma’s essential drug? CMA opens investigation into withdrawal of supply of bipolar treatment


On 6 October 2020, the CMA announced that it has launched an investigation into a possible abuse of a dominant position by the pharmaceutical company Essential Pharma.  The CMA stated that Essential Pharma’s proposed withdrawal of Priadel, a lithium based drug for the treatment of bipolar disorder, “would mean that thousands of patients need to switch to alternative, more expensive, lithium treatments”.  Among those treatments is Essential Pharma’s own alternative lithium-based branded medicine Camcolit which has a reimbursement price roughly ten times higher than the price of Priadel (see here). This is the most recent of a number of ongoing investigations by the CMA into pricing in the generics sector.

The DHSC’s request for interim measures

As with other cases concerning pricing in the generic pharmaceutical sector, the Department of Health and Social Care (DHSC) has played a significant role.

The DHSC initially requested that the CMA impose interim measures on Essential Pharma to prevent the withdrawal of Priadel while the CMA investigates Essential Pharma’s behaviour. This would have been a rare example of the use of such measures by a competition authority, and the promotion of the remedy by a government department is a further signal of the potential for such powers to be more widely used in antitrust investigations in the UK, a development that has also been seen recently at a European level (see our previous article here).

However, formal intervention of this kind proved unnecessary, as Essential Pharma has given a voluntary commitment to continue to supply the drug while it tries to come to an agreement with the DHSC on pricing.

On the one hand, the involvement of the DHSC is perhaps unsurprising considering:

  1. the potential negative impact on patients’ health caused by the switching of treatments; and
  2. the likely increase in costs to the NHS resulting from the withdrawal of Priadel (the cheapest product of its kind on the market).

On the other hand, it is remarkable that despite amendments to the DHSC’s powers within the past couple of years, the DHSC continues to need to have resort to the tools available to the CMA in order to control availability and pricing of drugs.

Pricing restrictions for branded generics

The CMA’s investigation follows an announcement by Essential Pharma in August 2020 that it would no longer be supplying Priadel prolonged-release tablets from April 2021 onwards, as “restrictions on permitted pricing” meant that it was no longer viable to manufacture and supply the tablets. Branded medicines (even where they are off patent) are subject to pricing constraints, either under the voluntary Pharmaceutical Pricing Regulation Scheme (PPRS) or the statutory pricing scheme. The aim of these constraints is to alleviate financial pressure on the NHS by controlling profit made on sales to the NHS, whilst also “support[ing] the life sciences industry across the UK and future innovation”.[1] However, it appears that in this situation, these pricing constraints may have resulted in Essential Pharma having to sell Priadel at a loss.

The progression of the CMA’s investigation will therefore undoubtedly be of interest for generic companies, and in particular other suppliers of branded generics. A finding that the withdrawal of Priadel amounts an abuse of a dominant position would highlight the difficult position faced by generic companies which wish to increase prices when they are selling at a loss.  On the other hand, the spectre of overly high costs to the NHS remains a real threat in times of extreme pressure on the public purse.

A better tool to address concerns in pharma markets?

The history of Essential Pharma’s supply of lithium carbonate appears to have played an interesting role in the situation that is now the focus of the CMA’s investigation.

Essential Pharma acquired the rights to the Priadel trademark from Sanofi in 2018, following its acquisition of the rights to market and use the Camcolit trademark from Norgine in 2014.  It is unclear whether the CMA’s Mergers Intelligence Committee was made aware of these transactions at the time. However, the fact that these successive transactions appear not to have been reviewed under the CMA’s merger powers highlights a potential need for the CMA to redress the balance between investigating behaviour that arises as a result of reduced competition in the market, and proactively preventing such a reduction of competition in the first place.

Moreover, this latest addition to the recent slew of cases into pricing in the generics industry may prompt interested parties to question whether the CMA is using the right tool to address wider problems in this market. It may be time for the CMA to re-assess whether pursuing individual new antitrust investigations into the behaviour of individual pharma companies is merely a sticking plaster for a wider issue, and whether that wider question might be better addressed by a market investigation into the structural impact of pricing and reimbursement rules in this market.

[1] The Department of Health and Social Care and ABPI – The 2019 Voluntary Scheme for Branded Medicines Pricing and Access – Chapters and Glossary, published December 2018