The Welsh Assembly Government has hired a team of corporate investigators to probe allegations that a group of pharmaceutical companies formed a cartel to fix the prices of generic drugs and supply them to the National Health Service in Wales at artificially inflated prices.

Wales’ Minister for Health and Social Services, Edwina Hart, has commissioned Kroll, the world’s leading risk consulting company, on an “invest to save” basis, to review the evidence base of the allegations made against the firms and their officers, in order to confirm whether legal action against them is justified.

According to local reports, Kroll has been asked to investigate the evidence but not the companies themselves, and it is expected that the data will be analysed by government officials.

Last year, long-running investigations by the Department of Health Counter Fraud Services against a number of pharmaceutical manufacturers and individual officers of the companies over alleged anti-competitive conduct in connection with the supply of generics to the NHS in England resulted in out-of-court settlements with four of the companies – Norton, Ranbaxy (UK), Generics (UK) and Goldshield - which agreed to provide the NHS with compensation totalling around £34 million. The fraud is alleged to have place during 1996-2000 and to have involved the sale of warfarin and several penicillin-based antibiotics.

Under the terms of the settlements, the firms agreed to pay compensation to the NHS “on a full and final basis and without admission of liability…and to provide co-operation in connection with the continuing claims regarding the alleged price-fixing arrangements.”

Trial in September
However, a parallel investigation into the cartel claims, conducted by the Serious Fraud Office and codenamed Operation Holbein, is due to come to trial at Southwark Crown Court in London on September 8.

The Welsh Assembly Government points out in a statement that the drug tariff “is an England and Wales tariff.” It adds: “Legal action can be launched within six years from the time it could reasonably be said an organisation became aware there was a problem. It is necessary to confirm the Welsh Assembly Government’s entitlement to take legal action,” hence the appointment of the Kroll investigators.