Nine charged by SFO in £150m price-fixing scandal

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The Independent Online

Nine current and former directors at some of Britain's leading drug companies are to be charged with conspiring to defraud the NHS of £150m.

A four-year investigation by the Serious Fraud Office (SFO) has concluded that five pharmaceutical suppliers colluded to fix prices on life-saving drugs.

The companies include Goldshield Group, which is listed on the London Stock Exchange. Goldshield, founded by chief executive Ajit Patel, denies any wrongdoing. In a statement the company said it "remains entirely confident that it will be acquitted of the charge against it".

The other companies involved also deny all the accusations.

The SFO alleges that the five firms operated a cartel to overcharge the NHS on Warfarin, an anticoagulant that thins the blood and reduces the risk of blood clots, the branded drug Marevan, and various penicillin-based antibiotics.

The accused are:

* Jonathan Close and Nicholas Foster, formerly of Norton Healthcare

* Luma Auchi, formerly of Regent-GM Laboratories Ltd

* Michael Sparrow, formerly of Generics (UK) Ltd

* Anil Sharma, formerly of Ranbaxy (UK) Ltd

* Ajit Patel and Kirti Patel of Goldshield Group

* Denis O'Neill and John Clark of Kent Pharmaceuticals

The companies involved are responsible for supplying the NHS with more than 50 per cent of the generic drugs that are used in UK hospitals.

The SFO used about 150 staff and police at the peak of its inquiries, which included raids on offices across the country.

The SFO describes the case, dubbed Operation Holbein for reasons that are not clear, as perhaps its largest ever. The case controller Philip Lewis said: "This important case involving an allegation of dishonest price-fixing is likely to have a significant impact upon the business culture of this country."

The SFO alleges price-fixing occurred between January 1996 and December 2000, a conclusion it reached after a tip-off from a whistleblower at one of the accused companies. The accused will be charged in the next few days and are due to appear at Bow Street magistrates' court on 27 April.

Charges of conspiracy to defraud could result in prison sentences of 10 years, though recent convictions suggest that between five and seven years is more likely if the accused are found guilty.

The case has its roots in a parliamentary inquiry from 1998 that noted unusual movements in the prices of certain vital drugs.

Mr Patel of Goldshield, a trained chemist, was arrested four years ago, but not charged.

The settlements so far

Although the individuals in the price-fixing case say they are not guilty, some of the companies they work for have already settled with the NHS.

Norton, the US healthcare giant, said yesterday it would pay £13.5m in compensation to the NHS over the allegations.

Generics and India's Ranbaxy earlier agreed to pay £12m and £4.5m respectively, while declining to accept any liability.

Norton is the biggest manufacturer of generic drugs for the NHS and has been named in several ongoing lawsuits relating to the price-fixing allegations. Jim Gee, the director of NHS counter fraud services, welcomed the deal with Norton.

He said: "Norton is the third of the defendant companies to have recognised the strength of the claim made by the NHS and to have decided to act in the public interest.

"The remaining defendant companies should recognise our resolve to press on with the continuing civil proceedings against all of those allegedly concerned in the price-fixing arrangements."