NHS sues Gaviscon maker Reckitt Benckiser

http://www.bbc.co.uk/news/business-12539197 22 February 2011

The NHS in England has launched legal action against Reckitt Benckiser, maker of heartburn medicine Gaviscon.

According to High Court documents, Health Secretary Andrew Lansley is leading the action on behalf of health authorities and primary care trusts.

The Department of Health refused to comment on the subject of the suit.

Reckitt Benckiser was fined £10m last year for abusing its dominant market position in the supply of heartburn remedies to the NHS.

A spokesman for Reckitt said the company could not comment as it had not been served with any papers.

Papers lodged at the High Court show Reckitt is being sued collectively by all 10 Strategic Health Authorities and 144 Primary Care Trusts in England, as well as Andrew Lansley as Secretary of State for Health.

‘Dominant position’

The Office of Fair Trading (OFT) said in October last year that Reckitt had restricted competition in the supply of heartburn medicines.

The household products maker withdrew the original Gavison from the NHS in 2005 and patients were transferred to Gaviscon Advance Liquid.

This happened after Gaviscon’s patent had expired, but before a generic name had been assigned to it, the OFT said.

That meant that prescriptions were issued for Gaviscon Advance, rather than pharmacists being able to choose a cheaper generic alternative.

The OFT’s inquiry followed an investigation by the BBC’s Newsnight programme in 2008.

Gaviscon is one of the most heavily prescribed medicines within the NHS.  Confidential papers leaked to the programme by a whistleblower showed it was also very profitable, with a gross margin of 77% in 2003.

The then-chief executive of the OFT, John Fingleton, said at the time: “This 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”.

In response to the OFT’s fine, Reckitt said that it had believed it was acting within the law at the time and respected the watchdog’s findings.

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