Two pharmaceutical firms have been fined a total of £70m by the UK competition watchdog for abusing their dominant market position to overcharge the NHS for a life-saving epilepsy drug.
The Competition and Markets Authority (CMA) has fined Pfizer £63m and Flynn £6.7m after NHS costs for the drug rose from £2m in 2012 to £50m the following year – an increase of 2,500%.
“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,” said the CMA.
The CMA first opened its investigation in 2013 and following a lengthy process including two appeals it was found the companies had abused their market position and were charging unfairly high prices for phenytoin sodium capsules.
The firms de-branded a drug previously known as Epanutin, meaning it was no longer subject to price regulation and the firms could set prices at their discretion. As Pfizer and Flynn were the dominant suppliers in the UK, the NHS had no choice but to pay the inflated price.
Over the four years following the de-branding, 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 charged by Pfizer.
The CMA previously issued an infringement decision in 2016, which the firms challenged. The matter was referred back to the CMA for further investigation, and it determined the companies’ behaviour was an abuse of their dominant positions in their respective market.
Andrea Coscelli, chief executive of the CMA, said: “Phenytoin is an essential drug relied on daily by thousands of people throughout the UK to prevent life-threatening epileptic seizures. 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.”
Pfizer has said it will appeal the latest CMA ruling.
“As we have consistently stated throughout this process, ensuring a sustainable supply of our products to UK patients is of paramount importance to us and was at the heart of our decision to divest phenytoin capsules to Flynn Pharma in 2012,” the company stated.
“The Competition Appeal Tribunal and the Court of Appeal both ultimately found in Pfizer’s favour in respect of the CMA’s original decision, which was set aside together with the associated fine.
“We maintain that we approached this divestment, as with all our business operations, with integrity and believe it fully complies with established competition law.”
The NHS was previously found to have been overcharged by 12,000% over eight years for Actavis UK’s hydrocortisone tablet.