Pfizer fined £84m for exploiting epilepsy drug price

The UK’s competition watchdog has fined Pfizer a record £84.2 million, and slapped a £5.2 million fine on distributor Flynn Pharma for raising the price of an anti-epilepsy drug by 2600% overnight.

The Competition and Markets Authority (CMA) found the companies had broken competition rules by increasing the price of phenytoin sodium capsules in 2012 after “de-branding” the drug.

The amount the NHS was charged for 100mg packs of the drug rocketed from £2.83 to £67.50, before reducing to £54 from May 2014, the CMA said.

NHS expenditure on phenytoin sodium capsules increased from about £2 million a year in 2012 to about £50 million in 2013.

UK prices of the drug have been many times higher than Pfizer’s prices for the same drug in any other European country, according to the CMA.

However Pfizer has responded by saying it believes the CMA’s findings are “wrong in fact and law” and will be appealing all aspects of the decision.

The action by the CMA reflects a wider crackdown on ‘price gouging’ in the UK market. The government has introduced new legislation to close loopholes which allow overnight price increases.

Used by around 48,000 patients in the UK, phenytoin sodium is used to prevent and control seizures.

Patients should not usually be switched to other products due to loss of seizure control, which can have serious health consequences.

The CMA said that this meant that the NHS had no alternative to paying the increased prices.

Before September 2012, Pfizer manufactured and sold phenytoin sodium capsules to UK wholesalers and pharmacies under the brand name Epanutin and the prices of the drug were regulated.

But that month Pfizer sold the UK distribution rights for Epanutin to Flynn Pharma, which de-branded (or ‘genericised’) the drug, meaning that it was no longer subject to price regulation.

Since then Pfizer, through Flynn Pharma, has continued to sell the drug at significantly higher prices than when it was sold as Epanutin.

Flynn sells on the products to UK wholesalers and pharmacies, charging them prices which have been between 2,300% and 2,600% higher than those they had previously paid for the drug.

The CMA's Philip Marsden

The CMA’s Philip Marsden

Philip Marsden, chairman of the Case Decision Group for the CMA’s investigation, said:

“The companies deliberately exploited the opportunity offered by de-branding to hike up the price for a drug which is relied upon by many thousands of patients.

“This is the highest fine the CMA has imposed and it sends out a clear message to the sector that we are determined to crack down on such behaviour and to protect customers, including the NHS, and taxpayers from being exploited.”

Pfizer has claimed that Epanutin was loss-making before it was de-branded.

But the CMA has calculated that, according to Pfizer’s figures, all such losses would have been recovered within two months of the price rises.

To maintain the supply of phenytoin sodium capsules to those patients who rely on it, the CMA has given Pfizer and Flynn between 30 working days and four months to reduce their respective prices. Both companies will continue to be able to charge prices which are profitable, but their prices must not be excessive and unfair, the CMA said.

Warwick Smith, Director General of the British Generic Manufacturers Association, said: “Pfizer’s cynical behaviour flies in the face of the virtuous circle between innovator and generic companies which normally works extremely well in the interests of patients and the NHS.”

“When originators put their resources into artificially increasing the commercial value of their older products by extending their monopoly, they not only cost the NHS more money, but fail to live up to their promise to society to deliver much needed new medicines.”

In a written statement, Pfizer said it “refutes the findings” of the CMA, and said it always maintains integrity and complies with established competition law in its dealings.

The company added: “Phenytoin capsules were a loss making product for Pfizer and the Flynn transaction represented an opportunity to secure ongoing supply of an important medicine for patients with epilepsy, while maintaining continuity of manufacture.  When Flynn launched its product, the company set a price that was between 25 and 40% less than the price of the equivalent medicine from another supplier to the NHS which had long been regulated, and appeared to be acceptable to, the Department of Health.”

 

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