The CMA has accused the companies of having broken competition law by charging “unfairly high prices” for phenytoin sodium capsules in a statement of objections detailing its provisional view today (August 5).

Pfizer and Flynn Pharma told C+D today that they will respond to the CMA’s statement of objections (see their statements to C+D below), and the CMA said it will consider their responses before concluding whether they broke the law.

 

Exploiting a loophole

 

According to the CMA’s provisional findings, the companies exploited a loophole by debranding the drug, which was known as Epanutin prior to September 2012. This meant it would no longer be subject to the same price regulations that apply to branded drugs.

“As Pfizer and Flynn [Pharma] 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,” the CMA said.

The companies’ actions meant that NHS spending on phenytoin sodium capsules rose from around £2 million a year in 2012 to about £50m in 2013, according to the CMA.

The CMA found that Pfizer’s prices were “between 780% and 1,600% higher than it had previously charged” and when Pfizer started supplying the drug to Flynn Pharma, the latter “sold it to wholesalers and pharmacies at prices between 2,300% and 2,600% higher than those they had paid previously”.

 

A six-year investigation

 

The CMA issued its first statement of objections to Pfizer and Flynn Pharma in August 2015.

In 2016, the CMA imposed a fine of £84.2m on Pfizer and £5.2m on Flynn Pharma for overcharging for phenytoin sodium and breaking the competition law. Flynn Pharma later vowed to challenge the CMA’s decision, warning that it was a “serious error” and would result in a shortage of epilepsy drugs for doctors and patients.

Both Flynn Pharma and Pfizer appealed the CMA’s decision and in June 2018, the Competition Appeal Tribunal (CAT) “set aside” the CMA’s finding that the companies’ prices were an unlawful “abuse” of dominance, although it upheld the competition watchdog's findings on market definition and dominance.

The matter of “abuse” of dominance was then referred back to the CMA. The competition watchdog and Flynn subsequently went to the Court of Appeal, which reinforced the CAT’s decision and asked the CMA to look at its evidence against the two companies once again.

The CMA started re-investigating the matters and re-opened the case in June 2020.

 

Flynn Pharma: We did not exploit any loophole

 

Commenting on the CMA’s provisional findings, Flynn Pharma said that it is “disappointed” to receive another statement of objections after the first one six years ago.

“Flynn has consistently asserted that the CMA’s case is fundamentally flawed and that it has not infringed competition law or exploited any loophole and Flynn has consistently sought to maintain the product such that it is available for patients,” a spokesperson told C+D.

“Flynn will continue to work constructively and in the proper way with the authority to bring this case to a close. We will study the detailed statement of objections, about which the CMA notes no assumption should be made that there has been an infringement of competition law, and provide a detailed response in accordance with agreed timelines, due process and in the proper forum,” they added.

The company reassured that patients who rely on phenytoin sodium will continue to have uninterrupted access to it.

 

Pfizer: We continue to cooperate with CMA

 

A spokesperson for Pfizer told C+D that “ensuring a sustainable supply of our products to UK patients is of paramount importance to Pfizer and was at the heart of our decision to divest the product in 2012”. 

“In 2020, the Court of Appeal upheld the CAT’s finding in the company’s favour. Pfizer continues to cooperate fully with the CMA’s ongoing investigation,” the spokesperson said.

Pfizer reiterated that the CMA’s findings are provisional and “all parties will have the opportunity to respond” before a final decision is reached.