Pfizer, Flynn face reinstatement of £90m CMA fine

Facing penalty for dramatic price hikes of an epilepsy drug

The UK’s competition regulator is pushing to reinstate a £90m fine for Pfizer and Flynn Pharma – quashed last year – over price hikes for an epilepsy drug.

The case dates back to 2015, when the Competition and Markets Authority (CMA) accused the two companies of dramatically raising the price of phenytoin sodium, a drug that has been used to treat epilepsy for decades, which at the time was manufactured by Pfizer and sold in the UK by Flynn.

A report in the Financial Times says the CMA is arguing that an appeals tribunal erred in law when it backed the companies’ appeal against the fine, which was levied in 2016 and set damages of £84.2m for Pfizer and £5.2m for Flynn.

Pfizer originally sold the drug as Epanutin and – according to the CMA – the NHS spent around £2.3m a year on the drug before it sold the UK distribution rights to Flynn in 2012. It is estimated that around 50,000 people in the UK rely on phenytoin to control seizures.

Flynn de-branded the product and hiked the price by up to 2,600%, says the CMA, and as a result the amount the NHS was charged for 100mg packs of the drug rocketed from £2.83 to £67.50, before reducing to £54.00 from May 2014.

In 2013, the cost of the drug to the NHS rocketed up to £50m, according to the authority, which maintains that the increases resulted from a monopolistic position that had been abused.

At the time the complaint was first raised, Pfizer argued that the price of the drug had been set at a level that was profitable in order to ensure a stable supply, while Flynn indicated the price it charged was in line with rival drugs.

"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," it said.

The FT notes that when the £90m judgment was struck down last year, the tribunal concluded that in general “price control is better left to sectoral regulators, where they exist, and operated prospectively; ex post price regulation through the medium of competition law presents many problems”.

According to court filings, the CMA is arguing that "if pharmaceutical companies are entitled to charge unfairly high prices in circumstances such as those in this case, this has a serious knock-on effect on the resources of clinical commissioning groups and patient care".