Legal challenge to drugs price-fixing

A price-fixing arrangement for common medicines that has been in force for 30 years was challenged in the High Court yesterday.

A price-fixing arrangement for common medicines that has been in force for 30 years was challenged in the High Court yesterday.

The Office of Fair Trading (OFT) has launched an attempt to end Britain's last remaining system of resale price maintenance, which has kept prices of products such as paracetamol, multivitamins and garlic supplements artificially high.

More than 2,000 branded medicines are maintained at high prices, including the cold remedy Lemsip, the painkiller Nurofen and the indigestion treatment Rennies. Since 1970 manufacturers have been permitted to set minimum prices to the public, maintaining high profit margins.

If the OFT wins,supermarkets are expected to cut the prices of branded medicines.The Community Pharmacy Action Group has argued that this would put thousands of village pharmacies out of business, denying country dwellers access to medicines.

The price-fixing arrangement is the last to be permitted in Britain, after a similar arrangement on books was ended in 1997. The Restrictive Practices Court, which is hearing the new case, has in the past accepted that it was in the public interest because rural pharmacies would otherwise close.

The OFT will argue that sales of branded medicines are less important to chemists' shops than they were. It will say the number of chemists' shops is growing - not declining, as it was in 1970 - and that many are close to one another. The balance of goods they sell has also changed, with a greater emphasis on non-drug products, such as cosmetics.

The case is expected to last until December. A judgment is likely early next year.