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Reckitt faces inquiries over 'plan' to maintain Gaviscon's dominance

Reckitt Benckiser faces a series of investigations by competition and health regulators over an alleged secret plan to maintain a monopoly in the supply of Gaviscon, the lucrative heartburn medicine.<br/> <br/> Internal documents show that executives at Reckitt, the Hull-based drug and cleaning products company, plotted under the codename “Project Eric” to block rivals from selling cheaper generic copies of Gaviscon.<br/> <br/> One former senior executive said Reckitt had “cheated the NHS”. It is thought that a cheaper, generic version of Gaviscon could have saved the health service £40 million a year.<br/> <br/> E-mails between executives discuss how to “drag out as long as possible” the process of other companies being allowed to manufacture generic versions, and their intention to create “a further barrier to competitors” and “restrict entry for new competitors”.<br/> <br/> The company announced an internal investigation into the allegations, made by BBC2’s <i>Newsnight</i>, insisting that it was “a responsible company in the way it conducts its business”.<br/> <br/> A spokesman for the Office of Fair Trading said: “We are aware of the story and are considering whether there may be a competition case to answer.” The NHS Counter Fraud Service is also considering whether an inquiry falls within its remit, and the House of Commons Health Select Committee may also investigate.<br/> <br/> Kevin Barron, MP, chair of the committee, said he was “disturbed” by the e-mails. “I will be taking it back to the committee to look at,” he said.<br/> <br/> However, it is not clear whether any laws have been broken. One regulatory source said: “Members of the public might not find it particularly wholesome. It might be sharp practice and they may be sailing close to the wind, but that doesn’t mean it’s illegal.”<br/> <br/> Before a rival company can create a generic drug, the British National Formulary must give it an official title. Reckitt tried to claim Gaviscon was unique and such a title could not be issued. It objected in 2000, 2003, 2005 and 2006.<br/> <br/> The drug company also successfully lobbied the British Pharmacopoeia Commission (BPC), part of the Medicines and Healthcare Regulatory Agency, that for health and safety reasons, a detailed quality specification known as a monograph was needed.<br/> <br/> One Reckitt executive wrote: “Should we not drag it out as long as possible . . . £9 million of business is at stake”. The e-mails talk of “a clever idea” - to make a near-identical product with a different name. “There must be something we can dig out of the cupboard!” one executive wrote.<br/> <br/> Reckitt also tried to persuade doctors to prescribe the new Gaviscon Advance. In 2005 the industry’s watchdog found it guilty of unethical behaviour.<br/> <br/> The news comes shortly after the European Commission began an inquiry into whether pharmaceutical companies were employing illegal tactics to delay generic versions.<br/> <br/> In January, it raided the offices of some of the world’s largest drug companies, including Pfizer, GlaxoSmithKline, Astrazeneca, Johnson & Johnson, Merck & Co and Sanofi-Aventis. In 2005 AstraZeneca, the Anglo-Swedish drug manufacturer, was fined €60 million for trying to delay rival versions of its ulcer drug, Losec, thereby keeping prices artificially high.<br/> <br/> A spokesman for Reckitt said: “We are shocked by the allegations . . . and by the inappropriate sentiment expressed in some of the internal correspondence of 2003.” A spokesman for the BPC said it was “aware that the company would want to protect its market”. He added: “When Reckitt sought to protect the monograph being published with a legal challenge, the BPC rejected this request and proceeded with its publication.”

Full post as published by International and UK Law on March 07, 2008 (boomark / email).