The UK Competition and Markets Authority (CMA) has fined Pfizer and Flynn Pharma a combined total of almost GBP 90 million (US$110 million) for increasing the prices of phenytoin anti-epilepsy tablets by over 2,000%.
American global pharmaceutical Pfizer and UK-based specialist pharmaceutical company Flynn Pharma are responsible for supplying the antiepileptic drug phenytoin sodium to the UK National Health Service (NHS).
Epilepsy is estimated to affect one in every 100 people in the UK. Phenytoin, first manufactured in the early 20th Century, can prevent several types of seizure and is taken by an estimated 48,000 people in the UK.
Pfizer previously manufactured and sold phenytoin sodium to UK wholesalers and pharmacies under the brand name Epanutin, at regulated prices. However, in September 2012, the company sold the UK distribution rights to Flynn Pharma, which sold the drug as a generic under no brand name. Unfortunately, for the NHS, this also meant the drug was no longer subject to price regulation.
Pfizer continued to manufacture the drug, supplying it to Flynn Pharma at prices significantly above those at which it previously sold Epanutin. Then, Flynn Pharma sold the products to the UK healthcare system at prices up to 2,600% higher than those previously paid. This meant the NHS had to pay GBP 67.50 for a packet of 100 mg tablets, compared to just GBP 2.83 before the de-branding process. Switching patients who are already taking phenytoin sodium to other drugs can be dangerous, increasing the risk of harmful seizures, meaning the NHS had no option but to pay these increased prices.
According to the Competition and Markets Authority(CMA), the UK’s major competition and consumer authority, prices in the country were many times higher than those charged by Pfizer in other European nations. NHS spending on the drug increased from GBP 2 million in 2012 to an astounding GBP 50 million in 2013. As a result, CMA has declared that Pfizer and Flynn Pharma abused their positions in the market for the manufacture and sale of phenytoin sodium and charged ‘excessive and unfair’ prices.
As well as ordering the companies to lower the prices of the drug, CMA fined Pfizer GBP 84.2 million and distributor Flynn Pharma the smaller sum of GBP 5.2 million. The leader of CMA investigation commented that the companies exploited the de-branding process to increase the price of a drug, which is essential for thousands of people, and consequently cost UK taxpayers millions of pounds.
This fine is the highest that CMA has ever levied and sends a warning to others in the pharmaceutical sector about such behaviour. CMA says they are determined to clamp down on actions like these to protect customers, including taxpayers and the healthcare system, from exploitation.
Pfizer and Flynn Pharma plan to appeal the decision, claiming that they complied with UK competition law and marketed the drug at a price lower than that of alternative epilepsy therapies sold in the UK.
To maintain supply of this essential drug, CMA has given the pharmaceutical companies up to four months to reduce their prices. CMA says they can still charge prices that allow them to make a profit, but must not be excessive.
This is not the first case of a hefty fine on a pharmaceutical company raised by the UK CMA. In February 2016, for example, the Authority fined a number of pharmaceutical companies – including GlaxoSmithKline (GSK) – GBP 45 million for anti-competitive agreements (so called ‘pay-to-delay’ deals) in the supply of generic versions of Seroxat (paroxetine), a blockbuster antidepressant [1]. CMA has a further four ongoing investigations into other pharmaceutical companies, sending a clear message to the sector on the importance of fair competition and pricing strategies.
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Reference
1. GaBI Online - Generics and Biosimilars Initiative. UK’s competition authority fines GSK for pay-for-delay [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2017 January 27]. Available from: www.gabionline.net/Policies-Legislation/UK-s-competition-authority-fines-GSK-for-pay-for-delay
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Source: UK Competition and Markets Authority (CMA)
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