Pfizer, Flynn fined £70m for price-gouging on epilepsy drug

The Competition and Markets Authority handed down £70m in fines to two pharmaceutical companies on Thursday, for charging hugely excessive prices for an anti-seizure drug.

Pfizer was fined £63m and Flynn given a £6.7m penalty, after the competition regulator reassessed part of the case around the prices charged to the NHS for the epilepsy medicine phenytoin.

The fines were the result of an “in-depth investigation”, which found that Pfizer and Flynn charged unfairly high prices for phenytoin sodium capsules for more than four years.

It said the two firms “de-branded” the drug, previously known as Epanutin, meaning it was no longer subject to price regulation and they could set prices at their discretion.

Given Pfizer and Flynn were the dominant suppliers of the drug in the UK at the time, the NHS had no choice but to pay the inflated final price for the “important” anti-epilepsy medicine.

Over the following four years, Pfizer charged prices between 780% and 1,600% higher than previously.

The company supplied the drug to Flynn, which then sold the capsules on to wholesalers and pharmacies at a price between 2,300% and 2,600% higher than the prices previously charged by Pfizer.

According to the CMA, the illegal behaviour led to NHS annual costs for phenytoin capsules increasing from £2m in 2012 to about £50m the following year.

Following its original investigation, the regulator issued an infringement decision in December 2016, finding that the companies’ behaviour broke competition law.

Pfizer and Flynn challenged that decision at the Competition Appeal Tribunal (CAT), which upheld the CMA’s findings on market definition and dominance, but set aside its conclusion that the companies’ prices were an unlawful “abuse” of dominance.

The CAT referred the matter back to the CMA for further consideration, known as a remittal.

After that, the CMA and Flynn appealed to the Court of Appeal, which dismissed Flynn’s appeal in its entirety and upheld aspects of the CMA’s appeal relating to the application of the legal test for unfair pricing in March 2020.

The CMA then decided to re-investigate the matters remitted by the CAT and opened its current investigation in June 2020.

Following additional evidence gathering and analysis, the CMA said it determined that the companies’ behaviour was an abuse of their dominant positions in their respective markets, and that both Pfizer and Flynn charged unfair prices for phenytoin capsules.

“Phenytoin is an essential drug relied on daily by thousands of people throughout the UK to prevent life-threatening epileptic seizures,” said CMA chief executive Andrea Coscelli.

“These firms illegally exploited their dominant positions to charge the NHS excessive prices and make more money for themselves - meaning patients and taxpayers lost out.

“Such behaviour will not be tolerated, and the companies must now face the consequences of their illegal action.”

Reporting by Josh White at Sharecast.com.