Competition and Markets Authority (CMA) found that Pfizer and Flynn charged unfairly high prices for phenytoin sodium capsules for over 4 years, ultimately paid for by the NHS. These two companies are fined for 70 mn pound out of which Pfizer fined pound 63 million and Flynn fined for pound 6.7 million.
The firms de-branded the drug, previously known as Epanutin, meaning it was no longer subject to price regulation and the firms 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 this important anti-epilepsy medicine.
Over the following 4 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.
This illegal behaviour led to NHS annual costs for phenytoin capsules increasing from pound 2 million in 2012 to approximately pound 50 million the following year.
Following its original investigation, the CMA previously issued an infringement decision – finding that the companies behaviour broke competition law – in December 2016. Pfizer and Flynn challenged this decision at the Competition Appeal Tribunal (CAT). The CAT 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 this matter back to the CMA for further consideration – known as a remittal.
The CMA and Flynn then appealed to the Court of Appeal. In March 2020, the Court 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. Following this, the CMA 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 has 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.
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.
