Mercury Pharmaceuticals Limited and others (Appellants) v Competition and Markets Authority (Respondents)

Permission to Appeal application lodged

Case summary
Permission to Appeal
Previous proceedings

Case summary

Case ID

UKSC/2025/0153

Parties

Appellant(s)

Mercury Pharmaceuticals Limited, Advanz Pharma Services (UK) Limited, Mercury Pharma Group Limited and Advanz Pharma Corp Limited

Respondent(s)

Competition and Markets Authority

Issue

In deciding whether to grant permission to appeal from the Competition Appeal Tribunal in respect of the unfair price charged for a generic medicine, did the Court of Appeal err in failing to admit new evidence as to the price at which the drug had sold after the Tribunal’s hearing?

Facts

Until 2017 Advanz was the sole UK distributor of a generic medicine, Liothyronine sodium. Advanz increased the price of a box of 28 liothyronine tablets approximately 3000% from £4.05 in October 2007 to £245.87 in July 2017. In 2021, the Competition and Markets Authority (the respondent, ‘CMA’) concluded Advanz had unlawfully abused its dominant position in the market for Liothyronine by charging an unfair price and imposed penalties in excess of £100 million. To determine whether the price charged for a product is unfair, the CMA must first decide what would be a fair price for the product. One method of determining the fair price for a product is the “Cost Plus” method. In essence, this method consists of calculating the cost of manufacturing the product and adding a profit margin considered to provide a reasonable rate of return on capital. Applying the “Cost Plus” method the CMA concluded that the highest fair price for a box of Liothyronine tablets was £4.94. This calculation formed the basis of the CMA’s conclusion that Advanz had charged an unfair price and of the penalty Advanz was charged. Advanz appealed the CMA’s conclusions to the Competition Appeal Tribunal (‘CAT’). Amongst other grounds of appeal, Advanz argued that the “Cost Plus” method was flawed. Advanz suggested several alternative methods of determining a fair price for Liothyronine. One of these alternative methods was the level at which the price for a product settled after the entry of new companies into the market for the product. In the present case this was the level at which Liothyronine’s price settled after two other pharmaceutical companies started selling it in the UK in 2017. At the time of the CAT hearing in August 2022 the price of a box of Liothyronine tablets was in the region of £56. Advanz submitted that this should be regarded as the fair price for Liothyronine. The CAT rejected this argument on the basis that the market in Liothyronine was still affected by Advanz’s previous circa 3000% price increase. The CAT concluded circa £56 was not the fair price for Liothyronine but merely reflected the continuing effect of Advanz’s previous unfair pricing. Advanz applied for permission to appeal to the Court of Appeal against the CAT’s judgment. One of Advanz’s grounds of appeal was that by 2022 the market in Liothyronine had been competitive for sufficient time for prices to settle at a level ‘free from contamination’ by Advanz’s previous unfair pricing. In support of this argument, Advanz asked the Court of Appeal to consider new price data from after the CAT hearing. This data covers the period October 2022 to November 2024. The new data shows that after the CAT hearing the price of Liothyronine fluctuated, falling to circa £42 a box in July 2023 before increasing to circa £76 a box in November 2024. Advanz argues that the new data shows that, in a competitive market with several suppliers, the price of Liothyronine has now settled at a level far above the fair price determined by CMA’s theoretical “Cost Plus” model. The Court of Appeal refused to admit the new pricing data. The Court of Appeal concluded that it did not have the power to admit new evidence on an appeal against a CAT decision. It also noted that the new data arguably merely showed that the market in Liothyronine continued to be distorted by Advanz’s previous unfair pricing. The Court of Appeal also refused Advanz permission to Appeal on all its grounds of appeal except one (which related solely to the size of Advanz’s penalty) Advanz now appeals to the Supreme Court against the Court of Appeal’s refusal to admit the new evidence.