GG plc & Ors, R v

The issue in the appeal before the House is whether a prosecution will lie against the appellants for conspiracy to defraud the Secretary of State for Health and others by fixing and maintaining the price, and manipulating the supply, of certain drugs to suppliers of the drugs, if the steps taken in pursuance of the alleged conspiracy were dishonest and deceptive. The appellants raised the issue at a hearing of matters on which preliminary rulings were sought from Pitchford J and at which they asked him to quash the indictment on the ground that it did not disclose an offence against the criminal law. The judge on 27 April 2007 held against the appellants and ruled that the prosecution should go ahead. The Court of Appeal (Moses LJ and Jack and Owen JJ) on 9 November 2007 dismissed the appellants' appeal [2007] EWCA Crim 2659.

The defendants in the prosecution consist of five companies; together with nine individuals who were at the material times employees or directors of these companies. The companies were concerned in the manufacture, sale and/or distribution to wholesalers and pharmacists of drugs, mainly generic drugs, which pharmacists then supplied to members of the public on NHS prescriptions. The case being made against them is that in their respective capacities the defendants dishonestly fixed and maintained the price of the drugs. All save one of the defendants made submissions in the Crown Court and were appellants in the Court of Appeal, but the eighth and ninth named appellants in the Court of Appeal are not appellants before the House.

Count 2 in the indictment concerns a branded drug Marevan as well as the generic drug warfarin. In the interests of simplicity we propose to follow the example of the Court of Appeal and concentrate on count 1, which relates only to generic drugs.

Generic drugs are normally produced by a number of different manufacturers once the patent on a branded drug has expired. Suppliers provide list prices to the Prescription Pricing Authority, which calculates a drug tariff in reliance upon the lists of certain suppliers. The Department of Health does not regulate the prices of generic drugs, but states that it relies on the competition between suppliers in an open market to provide prices which represent value for money. Pharmacists purchase these drugs from the suppliers of their choice at their list prices and are reimbursed by the Department at the prices contained in the drug tariff for the cost of the drugs when they are dispensed on NHS prescriptions. The Department claims that the reimbursement system, to the knowledge of the suppliers, is predicated upon the existence of a genuine open competitive market and contends that it is important that the list prices published by suppliers and furnished by them to the Department should be a true reflection of the prices which should be charged in such a competitive market, otherwise they would pay the pharmacists' inflated prices…

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