Health secretary launches legal action against Reckitt Benckiser

The latest claim filed at the high court will not become public until papers are served on defendants

Health secretary Andrew Lansley has filed a high court legal claim, alongside 10 strategic health authorities and 144 primary care trusts, against household goods maker Reckitt Benckiser.

The FTSE 100 company insisted it had not been served with papers and knew nothing about the action. It refused to be drawn on speculation that the action might be related to its controversial marketing of Gaviscon heartburn treatment products in 2005 which resulted in Reckitt receiving a £10.2m fine from the Office of Fair Trading for anti-competitive behaviour four months ago.

Also among the named defendants to the claim is Reckitt Benckiser Healthcare (UK) Limited, the division which makes basic pharmaceutical products including Lemsip, Optrex, Disprin, Senokot, Strepsils, Bonjela, E45 and Gaviscon. With the acquisition of SSL International in November, Reckitt further added a range of Scholl and Durex products to its healthcare range.

A spokesman for the OFT confirmed that the fine issued last October over Reckitt's marketing of Gaviscon products did not amount to an umbrella settlement and that the Department of Health and other NHS bodies were free to pursue compensation claims.

Asked if it had come to an agreement with the health service over damages or compensation in relation to the Gaviscon anti-competition scandal, Reckitt refused to comment.

The latest claim was filed with the high court in London a week ago and will not become a public document until papers are served on the defendants. If the claim does relate to the Gaviscon affair, the fact that it has not been settled out of court would appear to indicate a level of disagreement between Reckitt and the Department of Health.

The claim follows four months after the Office of Fair Trading said it would impose a reduced fine on Reckitt after it admitted to breaches in competition law relating to its removal of Gaviscon Original Liquid from a list of prescription drugs available to NHS patients shortly after the expiry of a patent.

This delisting, the OFT concluded, was designed to make it harder for chemists to identify cheaper generic alternatives and to boost sales of Reckitt's new varient Gaviscon Advance Liquid. The Advance Liquid product was in patent and therefore not subject to generic competition.

The OFT's action followed the leaking of internal Reckitt documents to BBC Newsnight revealing the existence of "Project Eric", an alleged plot to manipulate the chemists and doctors into buying more expensive Gaviscon products.

The whistleblower who leaked the documents said at the time: "Reckitt cheated the National Health Service - it could have saved the NHS millions of pounds. I felt it had to be exposed." Reckitt denied cheating the NHS but said it was "unhappy with some of the language and the sentiment ... in the internal correspondence which are inappropriate". The company later agreed to pay the fine and admitted abusing its dominante position in the market for NHS heartburn medicines.

NHS prescription drugs have long been the subject of alleged market-fixing. In 2006 the Department of Health filed three legal claims against generic drug makers seeking more than £150m in damages for cartel behaviour in relation to the supply of some of the most commonly prescribed drugs —blood-thinning drug warfarin, penicillin-based antibiotics and a generic version of anti-ulcer pill Zantac. However it won settlements of just £40m.


Simon Bowers

The GuardianTramp

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