The CMA has provisionally found that the companies
exploited a loophole by de-branding the drug – known as
Epanutin prior to September 2012 – with the effect that
the drug was not subject to price regulation in the way
branded drugs are. As Pfizer and Flynn 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.
Following the overnight price increases by the
companies, NHS spending on phenytoin sodium capsules
rose from around £2 million a year in 2012 to about £50
million in 2013. For over 4 years, Pfizer’s prices were
between 780% and 1,600% higher than it had previously
charged. Pfizer then supplied the drug to Flynn, which
sold it to wholesalers and pharmacies at prices between
2,300% and 2,600% higher than those they had paid
previously.
In December 2016, following an in-depth investigation,
the CMA fined Pfizer
and Flynn for breaking competition law by charging
unfairly high prices for phenytoin sodium capsules.
The companies appealed against the CMA’s decision that
competition law had been broken and against the fine.
In June 2018, the Competition
Appeal Tribunal (CAT) upheld the CMA’s findings on
market definition and dominance but set aside the CMA’s
finding that the companies’ prices were an unlawful
“abuse” of dominance. The CAT referred the matter of
abuse back to the CMA for further consideration – known
as a remittal.
The CMA and Flynn then appealed to the Court of Appeal.
In March 2020 the Court dismissed
Flynn’s appeal in its entirety and upheld aspects of
the appeal brought by the CMA relating to the
application of the legal test for unfair pricing.
Following this, the CMA decided to re-investigate the
matters remitted by the CAT and opened its current
investigation in June 2020.
Andrea Coscelli, Chief Executive of the CMA, said:
Thousands of patients depend on this drug to prevent
life-threatening seizures as a result of their
epilepsy. As the CAT recognised, this is a matter
that is important for government, for the public as
patients and taxpayers, and for the pharmaceutical
industry itself. Protecting these patients, the NHS
and the taxpayers who fund it, is our priority.
The CMA’s findings are, at this stage, provisional.
Pfizer and Flynn now have an opportunity to respond to
the provisional findings set out in the Statement of
Objections and the CMA will carefully consider their
representations before deciding whether they broke the
law.
The CMA remains committed to its work to tackle
robustly any illegal behaviour by drug companies
overcharging the NHS. It recently fined firms £260
million for competition
law breaches in relation to the supply of
hydrocortisone tablets and £100 million for competition
law breaches in relation to the supply of liothyronine
tablets. A number of other CMA investigations are
continuing.
For more information see the phenytoin sodium
capsules: suspected unfair pricing case page.
