Saturday, July 31, 2021

Pharma Profits Before Patients


The answer is a resounding no

Advanz Pharma – and its former private equity owners HgCapital and Cinven inflated thyroid drug prices over 10n years by up to 6,000% paid out more than £400m to shareholders and directors during the same period. So much for the usual defence of high prices and lucrative profits that it is for the expense of research and development costs.

Advanz and its subsidiaries were found to have charged “excessive and unfair prices” between 2009 and 2017 for liothyronine tablets, primarily used to treat hypothyroidism and were fined a combined £100m by the Competition and Markets Authority (CMA).

During the period that the CMA found that drug prices were inflated, Companies House filings show that dividends were paid to entities controlled either from Luxembourg or Jersey.

The shareholder payouts were channelled through Mercury Pharma Group, part of the Advanz Pharma network of companies and one of the firms fined in the CMA’s crackdown.

Between 2009 and 2012, Mercury Pharma Group paid £44.4m in dividends while under the ultimate ownership of Hg Capital, via a Luxembourg-based entity called Midas.

In 2012, fellow private equity group Cinven bought Mercury from Hg and merged it with Amdipharm, which it had purchased that year, combining them under the control of a Jersey-based entity called Amdipharm Mercury.

Under the ownership of this new entity, Mercury paid a £12.8m dividend.

Cinven sold Amdipharm Mercury to Canadian drugs company Concordia Healthcare in a £2.3bn deal in 2015, but the Jersey-based structure remained in place.

Now under Concordia’s control, Mercury paid dividends of £240.3m in 2016 and £85.4m in 2017, both to the Canadian firm’s London-based subsidiary Concordia Investment Holdings (UK) Limited

This firm paid no income tax over the period, instead claiming tax credits worth a combined £42m. It was able to do so in part because it made significant losses over the three years, partly due to £344m in debt interest that it paid on £1.47bn in loans that carried an interest rate of 10.5%.

As well as paying the Jersey entity hundreds of millions of pounds in interest, Concordia Investment Holdings (UK) also paid it dividends worth a combined £65m.

Also over the eight-year period covered by the CMA’s fine for inflating drug prices, Advanz Pharma also handed significant payouts to senior managers. The Guardian analysis found the company rewarded directors handsomely via a complex system of dividend payments and intra-company loans involving offshore entities. A subsidiary paid directors, who never numbered more than three people, about £21m over the period of the drug price inflation.

Drug firm that hiked prices by 6,000% paid shareholders £400m | Pharmaceuticals industry | The Guardian

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