Watchdog fines Pfizer and Flynn £70m for overcharging NHS for epilepsy drug

The drugmakers Pfizer and Flynn Pharma have been fined a total of £70m for overcharging the NHS for a life-saving epilepsy drug.

The UK’s competition watchdog fined New York-based Pfizer £63m and imposed a £6.7m penalty on Flynn, a smaller UK pharmaceutical firm based in Stevenage. Both companies said they would appeal.

The fines are the result of an in-depth investigation carried out by the Competition and Markets Authority (CMA), which concluded that Pfizer and Flynn charged “unfairly high prices” for phenytoin sodium capsules for more than four years.

The firms de-branded the drug, previously known as Epanutin, and sold it as a generic. That meant it was no longer subject to price regulation and they could set prices at their discretion.

The CMA said because Pfizer and Flynn were the dominant suppliers of the drug in the UK at the time, the NHS had no choice but to pay the inflated price for the important anti-epilepsy medicine.

Over the following four years, Pfizer charged prices between 780% and 1,600% higher than previously. The company supplied the drug to Flynn, which then sold the capsules on to wholesalers and pharmacies at a price between 2,300% and 2,600% higher than the prices previously charged by Pfizer.

This led to annual NHS costs for phenytoin capsules ballooning from £2m in 2012 to about £50m the following year.

The CMA had issued an infringement decision in December 2016, finding that the companies’ behaviour broke competition law, which was challenged by Pfizer and Flynn in a lengthy appeal process. In March 2020, the court of appeal dismissed Flynn’s appeal in its entirety and the CMA reinvestigated the matter.

Andrea Coscelli, the CMA’s chief executive, said: “Phenytoin is an essential drug relied on daily by thousands of people throughout the UK to prevent life-threatening epileptic seizures. These firms illegally exploited their dominant positions to charge the NHS excessive prices and make more money for themselves – meaning patients and taxpayers lost out.

“Such behaviour will not be tolerated, and the companies must now face the consequences of their illegal action.”

Pfizer said it would appeal. “Ensuring a sustainable supply of our products to UK patients is of paramount importance to us and was at the heart of our decision to divest phenytoin capsules to Flynn Pharma in 2012,” it said.

“The competition appeal tribunal and the court of appeal both ultimately found in Pfizer’s favour in respect of the CMA’s original decision, which was set aside together with the associated fine. We maintain that we approached this divestment, as with all our business operations, with integrity and believe it fully complies with established competition law.”

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Flynn Pharma said it was “surprised and disappointed” at the CMA’s decision and said it would also appeal again. “In our view the original CMA case was fundamentally flawed, and that view is unchanged in regard to the second decision,” the firm said.

It added: “The protracted nature of this case has now outlived two changes in the most senior leadership of the CMA and is indicative we say, of a lack of clarity and consistency in the alleged theory of harm and more fundamentally, an absence of wrongdoing.”