CMA accuses pharma firms of illegal pricing
The CMA has provisionally found that Pfizer and Flynn abused their dominant positions to overcharge the NHS for vital anti-epilepsy drugs, after reassessing the case.
Having gathered further evidence and after carefully assessing the facts, the Competition and Markets Authority (CMA) has reached a provisional view 鈥� known as a Statement of Objections 鈥� that Pfizer and Flynn broke competition law by charging unfairly high prices for phenytoin sodium capsules.
The CMA has provisionally found that the companies exploited a loophole by de-branding the drug 鈥� known as Epanutin prior to September 2012 鈥� 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 拢2 million a year in 2012 to about 拢50 million in 2013. For over 4 years, Pfizer鈥檚 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鈥檚 decision that competition law had been broken and against the fine. In June 2018, the Competition Appeal Tribunal (CAT) upheld the CMA鈥檚 findings on market definition and dominance but set aside the CMA鈥檚 finding that the companies鈥� prices were an unlawful 鈥渁buse鈥� of dominance. The CAT referred the matter of abuse back to the CMA for further consideration 鈥� known as a remittal.
The CMA and Flynn then appealed to the Court of Appeal. In March 2020 the Court dismissed Flynn鈥檚 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.
Andrea Coscelli, Chief Executive of the CMA, said:
Thousands of patients depend on this drug to prevent life-threatening seizures as a result of their epilepsy. As the CAT recognised, this is a matter that is important for government, for the public as patients and taxpayers, and for the pharmaceutical industry itself. Protecting these patients, the NHS and the taxpayers who fund it, is our priority.
The CMA鈥檚 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.
The CMA remains committed to its work to tackle robustly any illegal behaviour by drug companies overcharging the NHS. It recently fined firms 拢260 million for competition law breaches in relation to the supply of hydrocortisone tablets and 拢100 million for competition law breaches in relation to the supply of liothyronine tablets. A number of other CMA investigations are continuing.
For more information see the phenytoin sodium capsules: suspected unfair pricing case page.
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