Pharmaceuticals Cos SFO criminal inquiry

By Richard Eccles


April 2006

On 5 April 2006 the Serious Fraud Office (SFO) began criminal proceedings against five pharmaceutical companies who are alleged to have been party to price fixing arrangements for the supply of generic drugs to the NHS. Also facing prosecution are nine individuals, currently or formerly employed by the companies. This is against the backdrop of civil proceedings issued by the Department of Health.

The prosecutions concern an alleged conspiracy to defraud the NHS of millions of pounds in relation to the pricing and supply of warfarin, the branded drug Marevan, and penicillin-based antibiotics between 1996 and 2000. As the activities took place before the Enterprise Act 2002 came into force, no proceedings have been instigated under the cartel offence created under that legislation.

In 2002, a Department of Health request prompted the SFO to raid several companies’ premises (including the five currently targeted), and the homes of various directors. A four year SFO enquiry codenamed Operation Holbein followed.
Summonses have been served on Kent Pharmaceuticals Limited, Norton Healthcare Limited, Generics (UK) Limited, Ranbaxy (UK) Limited and the Goldshield Group Plc as well as nine individuals, some of whom are no longer employed by the relevant company.

The criminal charges are being brought against the backdrop of civil proceedings, issued in December 2002 and 2003. In those civil actions, the Department of Health claimed damages arising out of anti-competitive agreements between several generic drug companies, including the five named in the criminal proceedings.

Of those five companies, three have since announced settlements with the Department of Health in the civil actions. Ranbaxy (UK) Limited’s £4.5 million deal with the NHS and Generics (UK) Limited’s agreement to pay £12 million have been followed by a £13.5 million compensation package agreed recently by Norton Healthcare Limited. The settlement was reached without any admission of liability and on the basis that the companies would continue to co-operate with the Department of Health in relation to the continuing claims against the remaining defendant companies.

Source: SFO Announcement to Stock Exchange of 5 April 2006, available at Department of Health announcement of 4 April 2006, available at