NHS sues Reckitt over £90m drug 'rip-off'
The makers of Gaviscon are being sued for nearly £90m for overcharging the National Health Service for the heartburn treatment.
Reaction: Reckitt said it was 'shocked' by the allegations
Reckitt Benckiser allegedly charged doctors for a more expensive version of the drug when a cheaper one was available.
The firm, which also produces the Nurofen, Clearasil and Durex brands, has already been fined £10.2m by the Office of Fair Trading after admitting breaking UK and EU competition law over its sale of Gaviscon to the NHS.
Now Health Secretary Andrew Lansley, 10 strategic health authorities and 146 primary care trusts are suing the pharmaceutical giant at the High Court for the millions they say were overpaid.
The alleged abuse centres on Reckitt Benckiser's Gaviscon Original treatment, one of the most commonly prescribed branded drugs on the NHS. The product's patent was due to run out in 2005, allowing rival firms to produce copycat versions, known as 'generics', for a vastly lower price.
But Reckitt took steps that appeared to block this process.
It removed Gaviscon Original from the NHS approved list of drugs, but it did not propose a generic name for the drug which would have helped a cheap replacement version to come on to the market.
Instead it put forward a more expensive Reckitt Benckiser product, Gaviscon Advance, which was still within patent.
Doctors wishing to prescribe a treatment for heartburn had no other option available. Yet Gaviscon Original remained on sale and could be picked up over the counter in pharmacies.
Reckitt Benckiser's secret plan to 'expose the NHS to excess drug costs' was revealed by an anonymous whistleblower who contacted the BBC's Newsnight in 2008.
The person who leaked the documents said at the time: 'Reckitt cheated the Health Service.
'It could have saved the NHS millions of pounds. I felt it had to be exposed.'
The NHS spends a fifth of its annual £110bn budget – around £22bn – on drugs. The Commons public accounts committee has estimated the NHS could save £200m a year without affecting patient care by GPs prescribing lower cost but equally effective treatments.
Reckitt Benckiser said it was 'shocked' by the allegations, adding: 'Reckitt Benckiser is a responsible company.'
Although it denied cheating the NHS, it admitted anti-competitive behaviour and said it was 'unhappy with some of the language and the sentiment ... in the [leaked] internal correspondence, which are inappropriate'.
The amount of money sought from Reckitt Benckiser – £90m – coincidentally matches the pay and rewards package of its boss Bart Becht, one of the best rewarded chairmen of a FTSE 100 company.
Becht, a Dutchman, has led Reckitt Benckiser since the company was formed in 1999 through the merger of Britain's Reckitt & Colman and Holland's Benckiser.
He once said that his company makes 'very stupid products'.
Becht is famous not only for his huge salary but also his generosity to charity. In 2009 he gave stock options worth £110m to good causes.
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