The UK competition watchdog has accused US drug giant Pfizer (NYSE:PFE) Inc (NYSE:PFE) of abusing its dominant positions to overcharge the National Health Service for vital anti-epilepsy drugs, with prices hiked over 2,000%.
Following the price increases by Pfizer and UK distributor Flynn Pharma, spending by the NHS on phenytoin sodium capsules rose to about £50mln in 2013 from around £2mln in 2012, the Competition and Markets Authority (CMA) said.
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The CMA said it found that the companies exploited a loophole by de-branding the drug, which before 2012 had been called Epanutin, which resulted in the drug being freed from 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,” the CMA said in its statement.
This broke the law as the higher prices were an unlawful abuse of their market dominance.
For over four years, Pfizer's prices were between 780% and 1,600% higher than it had previously charged, the watchdog said, then with Pfizer's distributor Fynn selling the capsules to wholesalers and pharmacies at prices between 2,300% and 2,600% higher they had paid before.
The ruling from the CMA is provisional, it said, after the gathering of further evidence and careful assessment, following an in-depth investigation that was published in 2016, an appeal by the companies that was quashed by the Competition Appeal Tribunal (CAT) in 2018 and a further appeal that was quashed in the Court of Appeal last year.
The Court of Appeal 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, which led to the CMA taking the decision last June to re-investigate certain matters raised by the CAT.
"Thousands of patients depend on this drug to prevent life-threatening seizures as a result of their epilepsy," said CMA chief executive Andrea Coscelli.
"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."