Pharmaceuticals company Pfizer, which manufactures the epilepsy medicine phenytoin sodium capsules, has been fined a record £84.2 million by the Competition and Markets Authority (CMA). The company has been found to be breaking competition law by charging what the CMA said were 'excessive and unfair' prices in the UK for the medicine.
The distributor of this medicine, Flynn Pharma, has also been fined £5.2 million for selling this medicine to pharmacies and UK wholesalers at hiked up prices.
The companies were found to have increased the price of the medicine by 2,600% overnight. According to the CMA, the amount the NHS was charged for the drug jumped from £2 million a year in 2012 to £50 million a year in 2013. The prices were also found to be much higher than Pfizer’s prices for the same medicine in any other European country.
The CMA said both companies held a dominant position in their markets and had abused that position by charging such unfair prices. It has ordered the companies to reduce their prices.
The CMA explained that before September 2012, Pfizer manufactured and sold the medicine under the name Epanutin to UK wholesalers and pharmacies and the prices were regulated.
In September 2012, Pfizer sold the distribution rights of this medicine to Flynn Pharma, which meant the drug was de-branded. This meant it was no longer subject to price regulation.
Since then, Pfizer has continued to produce the medicine and supply it to Flynn Pharma at much higher prices. Flynn Pharma has then been selling the medicine on at an even higher cost.
Because switching medicines between brand names and generic versions could cause an increase in seizures in some people, the NHS has had to continue to prescribe this version of the medicine. This meant they had to pay the higher prices for the last 4 years.
Pfizer has responded to the CMA’s decision, saying that before selling it to Flynn Pharma, the epilepsy medicine was making a loss for the company. It said that selling the product was a way to continue to supply the medicine and continue to be able to manufacture it. However, the CMA believes that any losses made by Pfizer would have been recovered within two months of charging at the higher price.
Flynn Pharma has also responded, saying that phenytoin is still cheaper than some epilepsy medicines which could be prescribed as alternatives. Pfizer and Flynn Pharma have both said they will appeal the decision at the Competition Tribunal.
Exploited the opportunity
Philip Marsden, chairman of the Case Decision Group for the CMA’s investigation, 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. 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.
“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.”
Simon Wigglesworth, Epilepsy Action deputy chief executive, said: “This fine sends a clear message that the behaviour of Pfizer and Flynn Pharma regarding Phenytoin has been unacceptable.
“Drug price increases mean that the NHS spends more money on the same patient outcomes. This money could be better spent in other areas of epilepsy care, for example, specialist nurse posts.
“Our main priority is to make sure that people with epilepsy receive the treatment that is most effective in controlling their seizures. We hope that people with epilepsy continue to be prescribed the drug that works best for them, including phenytoin sodium.
“Switching between epilepsy drugs, including another manufacturer’s version of a medicine, can be problematic for people with epilepsy, leading to breakthrough seizures and worsening of seizure control. It is therefore important that the same medication is prescribed consistently.”