Gaviscon-maker Reckitt Benckiser has been slapped with a £10.2 million fine from the Office of Fair Trading for breaching UK competition law by artificially restricting prescribing choices for heartburn.
An OFT probe – sparked by an investigation by BBC Newsnight in 2008 - found that the group had effectively rigged a section of the heartburn market by withdrawing its off-patent Gaviscon Original Liquid from a database used by GPs to search for National Health Service medicines, so that only the branded and more expensive version - Gaviscon Advance Liquid - would appear available.
GPs can search this database to check whether a brand is still under patent protection and, if the medicine is no longer patented, can issue an ‘open prescription’ allowing pharmacists to dispense either the brand or a cheaper copycat version, which helps secure strong price competition between pharmaceutical suppliers and thereby provides substantial savings to the NHS.
The OFT alleged that Reckitt withdrew Gaviscon Original Liquid from this NHS prescription channel after its patent had expired but before the generic name was published, thereby blocking the prescription of cheaper alternatives and ensuring higher sales of its newer product Gaviscon Advance Liquid, which is under patent protection until 2016.
The watchdog’s Ann Pope told Sky News that while it was not clear how much Reckitt’s behaviour had cost the NHS, had it not withdrawn the veteran product savings could have been “considerable”.
Penalties a deterrent
According to OFT chief executive John Fingleton, the case “underlines our determination to prevent companies with a dominant position in a market from using their strength to seek to restrict competition from rivals,” and he stressed that the imposition of penalties “should serve to deter firms from engaging in anticompetitive behaviour of this sort in future”.
In a media statement, Reckitt said the investigation “relates to an infringement that took place a number of years ago under a highly complex area of competition law, on which there have only more recently been clarifying cases,” and that while it believed it was acting within the law at the time, “we respect the view of the OFT in this matter and have agreed to settle”.
The company was originally facing a £12-million fine but this was reduced following its admission and decision to co-operate as part of an early resolution agreement with the OFT.