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Pfizer epilepsy drug prices unfairly high, CMA finds

Christian Fernsby |
Having gathered further evidence and after carefully assessing the facts, the Competition and Markets Authority (CMA) has reached a Statement of Objections that Pfizer and Flynn broke competition law by charging unfairly high prices for phenytoin sodium capsules.

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The Britain's competition watchdog has provisionally found that the companies exploited a loophole by de-branding the drug – known as Epanutin prior to September 2012 – with the effect that the drug was not subject to price regulation in the way branded drugs are. As Pfizer and Flynn were the dominant suppliers of the drug in the UK, the NHS had no choice but to pay unfairly high prices for this vital medicine.

Following the overnight price increases by the companies, NHS spending on phenytoin sodium capsules rose from around £2 million a year in 2012 to about £50 million in 2013. For over 4 years, Pfizer’s prices were between 780% and 1,600% higher than it had previously charged. Pfizer then supplied the drug to Flynn, which sold it to wholesalers and pharmacies at prices between 2,300% and 2,600% higher than those they had paid previously.

In December 2016, following an in-depth investigation, the CMA fined Pfizer and Flynn for breaking competition law by charging unfairly high prices for phenytoin sodium capsules.

The companies appealed against the CMA’s decision that competition law had been broken and against the fine. In June 2018, the Competition Appeal Tribunal (CAT) upheld the CMA’s findings on market definition and dominance but set aside the CMA’s finding that the companies’ prices were an unlawful “abuse” of dominance. The CAT referred the matter of abuse 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 appeal brought by the CMA 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.

The CMA’s findings are, at this stage, provisional. Pfizer and Flynn now have an opportunity to respond to the provisional findings set out in the Statement of Objections and the CMA will carefully consider their representations before deciding whether they broke the law.

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