The recent ruling on Liothyronine by the UK’s Competition Appeal Tribunal (CAT) holds significant importance for antitrust professionals. The CAT upheld the Competition and Markets Authority’s (CMA) determination of an abuse of dominance but lowered the fine imposed from £101 million to £84 million. Liothyronine is among a series of cases where the CMA has taken action against excessive pricing in the UK generics industry due to concerns over significant price hikes.
The investigation into Phenytoin, initiated in 2013, marked the initial focus on such behavior, and subsequent to that case, Liothyronine and Hydrocortisone have been the most notable cases pursued by the CMA.
Although the case’s details might seem straightforward, they belie the complexity evident in the over 400 pages of the CMA’s 2021 decision. Over the span of 2007 to 2017, Advanz, the exclusive supplier of the generic drug Liothyronine, raised prices by an astonishing 6,000%, with NHS expenditures surging from roughly £600,000 annually in 2006 to about £30 million in 2016, despite largely consistent volumes.
However, the significance of CAT’s Liothyronine verdict extends beyond just addressing excessive pricing. It delves into economic methodologies and approaches that hold relevance for almost any assessment of damages in private competition cases. The ruling even offers insights into fundamental questions concerning the purpose of competition law. Additionally, its unexpected stance on the issue of deterrence also deserves attention.