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Pfizer fined £84m for ‘excessive’ epilepsy drug pricing

Pfizer will appeal "all aspects" of the watchdog's ruling

The government’s competition watchdog has fined manufacturer Pfizer and distributor Flynn Pharma a total of nearly £90 million for overcharging the NHS for an anti-epilepsy drug.

The Competition and Markets Authority (CMA) imposed a "record" £84.2m fine on Pfizer, and a £5.2m fine on Flynn Pharma for their parts in charging “excessive and unfair” prices in the UK for epilepsy drug phenytoin sodium.

The financial penalty imposed on Flynn represents 10% of the distributor’s worldwide turnover, which is the statutory maximum that the CMA can impose on a company if it is found to have infringed competition law, the watchdog announced in a statement today (December 7).

Pfizer and Flynn Pharma “abused” their “dominant position” in the marketplace by deliberately de-branding the drug in 2012 and hiking up the price, the CMA said.

As a result of a 2,600% overnight price increase when the drug was “genericised”, NHS expenditure on the epilepsy drug increased from “about £2m” a year to “about £50m” in 2013, the CMA said.

The CMA said the amount the NHS was charged for 100mg packs of the drug "rocketed" from £2.83 to £67.50. It then reduced to £54.00 from May 2014.

It added that the cost of the drug in the UK was “many times” higher than what Pfizer charges in other European countries.

Story behind the price rise

In September 2012, Pfizer sold the distribution rights of the phenytoin sodium capsules – which were being sold under the brand name Epanutin – to Flynn Pharma. The distributor de-branded the drug, meaning it was no longer subject to price regulation.

The CMA said its ruling and the fines relate to both the prices that Pfizer charged to Flynn Pharma – which were “between 780% and 1,600% higher” than Pfizer had previously sold the drug in the UK – and the prices that Flynn charged customers, including the NHS – “between 2,300% and 2,600% higher” than before September 2012.

Healthcare guidelines recommend that epilepsy patients who take phenytoin sodium capsules do not switch to other products, including another version of the product, and so “the NHS had no alternative to paying the increased prices for the drug”, the CMA stressed.

Philip Marsden, chairman of CMA group leading the investigation, said the companies “deliberately exploited” the opportunity offered by de-branding to hike up the price.

“Businesses are generally free to set prices as they see fit but…there is no justification for such rises when phenytoin sodium capsules are a very old drug for which there has been no recent innovation or significant investment,” he said.

Pfizer responds

Pfizer has refuted the CMA's decision, stating today: “The CMA’s findings are wrong in fact and in law”.

It will be appealing all aspects of the decision, Pfizer added.

“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 (DH),” the manufacturer said.

Pfizer said the ruling calls into question the role of the DH and the CMA in regulating the price of pharmaceutical products in the UK. It added that it will seek “clarity” in the “real policy and legal issues” of product pricing as part of its appeal process.

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.”

Price increases can be justified when generic companies invest in older medicines in order to keep them on the market and to meet current regulations, he stressed. “But we would never support activity designed purely to artificially increase prices.”

CMA "sending a message"

The CMA found both Pfizer and Flynn Pharma had broken competition law and has ordered both companies to reduce their respective prices within four months.

Mr Marsden added: “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.”

The CMA confirmed that it has four ongoing investigations into “suspected unfair pricing” in the pharmaceutical industry.

14 Comments
Question: 
What drugs do you think are overpriced?

Jupo Patel, Production & Technical

Many of the drugs churned out by Pharma are not even required. The drug is produced first  then they have to make up the 'disease' so they can then sell it.

John Randell, Non Pharmacist Branch Manager

Why aren't chemist and druggist covering the land mark case of the Belfast pharmacist who made a dispensing error that lead to a death but was not charged with manslaughter.... Please please please get the lawyer guy from your website..Charles I think to go through this.....this is breaking news...we should have to go to the BBC for news like this.....

S Pessina, Pharmacist Director

The CEO has probably got that much small change in his pocket. They won't even notice it.

David Moore, Locum pharmacist

£84m fine. Their turnover? Revenues in 2015 were $48.9 billion. Will they even notice this?

A Hussain, Senior Management

The way that they manipulated the Gabapentin situation was disgraceful too.

Andy Krestoff, Locum pharmacist

And pregabablin...

A Hussain, Senior Management

I meant pregabalin!!! Oops

Andy Krestoff, Locum pharmacist

oh no I'm sure they did manipulate gabapentin when it went off patent as well - Neurontin is  a Pfizer brand.. 

Andy Krestoff, Locum pharmacist

and I'm sure there was some fuss around atorvastatin/Lipitor also

Boom Shakalaka, Locum pharmacist

Will the 84m go back to the NHS?

Clive Hodgson, Community pharmacist

Treasury initially but NHS may persue for damages. Pfizer-Flynn were given between 1-4 months to reduce price to acceptable level. However they have announced an appeal and this will result in a delay allowing them to profit even further.

Paul Samuels, Community pharmacist

I wonder if that money will ever be seen.Pfizer have enough financial muscle to resort to lengthy legal proceedings to delay payment ad infinitum.They have always abused any monopolistic position in which they have found themselves.Witholding of supplies come to mind??

Clive Hodgson, Community pharmacist

Excellent result. In addition 4 other cases are in the pipeline with legislation to prevent in the future. Manufacturers of dicycloverine, doxepin, hydrocortisone and liothyronine tabs etc. hopefully should be there soon.

It was not just the enormous price hike that resulted in this record fine for Pfizer but also “exploitation of market dominance”.

Slightly digressing, but I do wonder how many of our generic shortages are being engineered by Big Pharma for financial gain? 

Jupo Patel, Production & Technical

I have one or two associates in Pharma and can say most probably all are engineered. 

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