Page last updated at 13:49 GMT, Tuesday, 23 February 2010

Gaviscon maker accused of market rigging

By Martin Shankleman and Meirion Jones
BBC Newsnight

Gaviscon Advance
Reckitt Benckiser may face fines worth millions of pounds

Household products giant Reckitt Benckiser has been accused by the Office of Fair Trading (OFT) of rigging the market for heartburn drug Gaviscon.

It claims the firm sought to restrict competition in the supply of heartburn medicines to the National Health Service (NHS), raising its costs.

The move follows an investigation by the BBC's Newsnight programme in 2008.

In a statement, Reckitt Benckiser (RB) said it believed it competed fairly in all of its operations.

"The OFT has stressed that no assumptions should be made at this stage," the company said.

"RB believes it competes fairly and within the letter and spirit of the law in all of our operations, and has co-operated fully with the OFT throughout its inquiry."

Whistleblower

The OFT action follows an investigation by the BBC Newsnight programme in 2008, which estimated that the cost to the NHS of the Gaviscon-maker's actions could be £40m.

Newsnight's Gaviscon investigation, first broadcast March 2008

A whistleblower - a former senior Reckitt executive - said the firm had "cheated the NHS" and could have saved it "millions of pounds" as Reckitt sold Gaviscon to the NHS for three times the cost of generic drugs.

Newsnight said that the company had devised a plan to preserve the profits from NHS sales of Gaviscon, which were under threat as the patent for the medicine was due to expire.

The company feared that once cheap generic rivals were allowed, earnings would collapse.

Under the plan, called Project Atlas, the company withdrew the medicine from the NHS, and replaced it with an alternative version - Gaviscon Advance - which was immune to competition from cheap rivals, as it was patent-protected until 2016.

In one confidential email from executive Charlotte Reader dated 17 April 2003, she had warned: "Over half of our total NHS Gaviscon business is still under constant threat from the potential introduction of a generic."

She urged the company to find a rival Gaviscon. "Ideally we would like to make a straight substitute and not communicate this to anyone and leave the name as Gaviscon Liquid."

The original Gaviscon was withdrawn from the NHS in 2005, and patients were transferred to the Gaviscon Advance. However the former is still available over the counter in the High Street.

Responding to the OFT announcement, Reckitt said: "Gaviscon Advance is a second generation product, superior to Gaviscon Original. Gaviscon Advance was launched to provide patients with effective and long lasting relief from heartburn and indigestion.

"RB will now review the OFT statement and respond accordingly."

Reckitt Benckiser has a turnover of more than £6bn a year and makes many household brands, such as Dettol, Clearasil and Cillit Bang.



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SEE ALSO
Gaviscon makers' plans revealed
14 Mar 08 |  Business
BBC hands OFT files on Gaviscon
14 Mar 08 |  Business
Gaviscon 'cheats' rival market
23 Feb 10 |  Newsnight

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