OFT predatory pricing ruling against drug company upheld

By Stephen Foley
Wednesday 16 January 2002 01:00

A Cambridge drug company fined £3.2m for predatory pricing has had the penalty slashed after appealing to the Competition Commission.

Napp Pharmaceuticals, which operates a virtual monopoly in the market for slow-release morphine, was the first company to be fined under new powers granted to the Office of Fair Trading last year. Yesterday's Commission judgment, the first of its kind, reduced the penalty to £2.2m.

The appeals tribunal agreed that Napp had charged excessive prices to GPs for its MST morphine product, while keeping the costs artificially low for hospitals to prevent rivals getting a toehold in the market.

But it said the OFT fine was too harsh, because drug prices are already regulated in an agreement between the Government and the pharmaceutical industry. The OFT was also wrong to include an extra penalty because Napp did not halt its controversial practices as soon as the OFT began an investigation. Waiting for an OFT ruling should not be seen as an aggravating factor, the Commission ruled. Napp, a privately-held company, must now adhere to a new pricing regime set out by the OFT and backdate the changes by reimbursing the NHS.

Napp's managing director, John Brogden, said he was bitterly disappointed that the commission had upheld the substance of the OFT's ruling. "We will need to consider its contents and its implications for Napp very carefully, including the possibility of a further appeal."

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