Drug companies raided after £400m fraud claim

[bongme]

hi

April 11, 2002

The Times

By Michael Horsnell

POLICE investigating allegations that drug companies defrauded the National Health Service of £400 million launched a series of raids yesterday on business and residential addresses.

The raids, which were directed by the Serious Fraud Office (SFO), followed months of inquiries into allegations that companies colluded to overcharge the NHS for penicillin-based antibiotics and the blood-thinning drug warfarin. Complaints of corruption during the awarding of drugs contracts are also being investigated.

The alleged fraud is said to have taken place between January 1, 1996, and December 31, 2000. The case was referred to the SFO after initial inquiries by the counter-fraud directorate of the Department of Health. The investigation is believed to have been prompted by evidence that came to light through routine internal inquiries by the NHS.

Six companies named by the SFO as being under investigation are responsible for more than 50 per cent of NHS supplies of generic medicines — drugs that are out of patent and therefore available for any manufacturer to produce without having to pay royalties. One of the companies, Regent-GM Laboratories, is part of General Mediterranean Holdings, a global investment group whose board of directors includes Lord Steel of Aikwood, the former Liberal Democrat leader, and Jacques Santer, the former head of the European Commission.

There is no suggestion of supplies being interrupted during the inquiry. No arrests were made during the raids and no charges are imminent, an SFO statement made through the London Stock Exchange Regulatory News Service said More than a dozen raids were made across mainland Britain in which officers removed documents, computer records and bank statements for analysis from company offices and the homes of executives. A spokesman for the SFO said that no further information could be made public for operational reasons.

The SFO took the unusual step of naming six companies that are involved in the supply of generic medicines. They are: Generics UK, Kent Pharmaceuticals, Regent-GM Laboratories, Goldshield Group, Norton Healthcare and Ranbaxy (UK).

Commenting on the allegations, Ivax Corporation, based in Miami, of which Norton Healthcare is a subsidiary, said: “It is Ivax’s policy to comply with the laws of all countries in which it operates. The company is co-operating fully with this investigation and believes its sales of these products have been in com- pliance with all applicable laws and regulations.”

Goldshield Group confirmed that SFO officers had visited company ofices and the home of Ajit Patel, its executive chairman. The company said that it “does not believe that it has at any time conspired to defraud the NHS or otherwise acted in an improper manner . . . but conducted its operations to the highest business standards.”

Manufacturers of branded medicines — those still under patent — adhere to the Pharmaceutical Price Regulation Scheme, an agreement between the Government and the industry to regulate the profit on sales of branded medicines to the NHS. Generic medicines, however, do not come under the same control, and manufacturers compete purely on price. Generic drugs cost the NHS £1.2 billion a year, about 22 per cent of its total drugs bill.

Paul Duke, general secretary of the British Generic Manufacturers Association (BGMA), said: “This has all come as news to us and it is really a matter for the SFO and the companies concerned. In the absence of further details on the nature of the inquiry we are not in a position to comment.”

The BGMA, which numbers Generics UK, Norton Healthcare and Ranbaxy amongst its nine members, has been contacted by the Department of Health to ensure that continuity of drug supplies will not be jeopardised.

A spokesman for the Association of the British Pharmaceutical Industry said: “While the ABPI views with grave concern any allegations of price fixing by generic manufacturers, it wishes to make clear that the research-based industry has always made every effort to ensure that supplies of its products are available for patients. The ABPI is convinced that there is no question of pharmaceutical companies hoarding supplies of branded prescription medicines.”

Detectives of the Metropolitan Police fraud squad, together with officers from the National Crime Squad and Strathclyde Police, executed search warrants in England, Scotland and Wales. Searches were undertaken with support from teams of lawyers, financial investigators and forensic computer specialists from the SFO.

Bongme

[Arnold Layne]

Dirty drug dealers at it again!