Drugs company Pfizer has been fined a record £84.2m by the UK competition regulator for hiking the price of their NHS anti-epilepsy drug by up to 2,600%.
The Competition and Markets Authority (CMA) issued the largest-ever fine, saying that the US drugs manufacturer ‘deliberately exploited’ the NHS and the British public.
The distributor Flynn Pharma was also fined £5.2m after it was found that both companies broke competition law by charging excessive and unfair prices in the UK for the anti-epilepsy drug, phenytoin sodium capsules.
Pfizer sold the distribution rights to Flynn who de-branded the drug, then called Epanutin, in September 2012 and raised the price by 2,600% overnight. Following its ruling, the CMA ordered the companies to reduce their prices.
The amount the NHS was charged for 100mg packs of the capsules went from £2.83 to £67.50 in 2012, before being reduced to £54 in May 2014.
As a result of the price increases, NHS annual expenditure on phenytoin sodium capsules increased from £2m to £50m between 2012 and 2013.
Pfizer, known for manufacturing drugs such as Viagra, has also been charging dramatically more for the capsules in the UK compared to all other European countries.
Both of the companies plan to appeal the decision.
Approximately 48,000 patients in the UK use phenytoin sodium capsules to prevent and control seizures. Switching medication brand for the drug carries increased risk of seizures and so the NHS had no alternative to paying the increased prices for the drug.
Philip Marsden, chair of the case decision group for the CMA’s investigation, said the fine ‘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’.
He said: ‘The companies deliberately exploited the opportunity offered by de-branding to hike up the price for a drug which is relied upon by many thousands of patients. These extraordinary price rises have cost the NHS and the taxpayer tens of millions of pounds.
‘Businesses are generally free to set prices as they see fit but those holding a dominant position should not abuse this situation and set prices that are excessive and unfair.’
Pfizer said that the drug had been loss-making before the de-branding and the company was forced to consider whether it could continue supplying it.
But the CMA calculated that all such losses would have been recovered within two months of the price rise.
Pfizer also said that the price set by Flynn was actually 25-40% lower than the cost of an equivalent tablet form from another supplier.
Both companies will continue to be able to charge prices which are profitable, the CMA ruled, but their prices must not be excessive and unfair.
In order to ensure that there should be no risk to the ongoing supply of the drug to patients, the CMA has given the companies between 30 working days and four months to reduce their respective prices.
Pfizer said in a statement that the company ‘believes the CMA’s findings are wrong in fact and law and will be appealing all aspects of the decision’.
The statement said: ‘Pfizer refutes the findings set out in the Competition and Markets Authority (CMA) decision. In this transaction, and in all of our business operations, we approached this divestment with integrity, and believe it fully complies with established competition law.’
Flynn Pharma said in a statement: ‘The CMA has taken more than [three and a half] years to reach this decision which in Flynn’s view is based on a wholly flawed understanding of the UK pharmaceutical market.
‘This has resulted in the CMA making a serious error in its decision which we believe may have unintended consequences on future investment in, and availability of, generics.
‘Flynn will appeal to overturn the CMA’s findings in the courts.’