Pfizer and Flynn Pharma accused of breaching competition laws

August 6, 2015

Competition and Markets Authority says companies abused position by raising prices of epilepsy drug by up to 2,600%

The competition watchdog has accused Pfizer and Flynn Pharma of breaching UK and European law by ramping up the cost of an epilepsy drug given to more than 50,000 British patients by as much as 2,600%. The Competition and Markets Authority (CMA) said its provisional view was that the companies abused a dominant position by charging “excessive and unfair” prices for phenytoin sodium capsules. As a result, the NHS, which used to spend around £2.3m a year on the capsules, saw its bill jump to more than £50m in 2013 and more than £40m last year.

Pfizer and Flynn said they were cooperating fully with the CMA and noted that a final decision on any infringement of the law had not yet been made.

The CMA can fine companies up to 10% of annual worldwide sales if they are found to have breached competition law. US-based Pfizer, which was in politicians’ crosshairs last year after trying to buy British rival AstraZeneca, manufactures the drug, and Flynn distributes it. The US group used to market the medicine itself, under the brand name Epanutin, but sold the rights to Flynn in September 2012. Since then the price has surged.

Pfizer said in a statement the drug had been making losses and it was therefore forced to consider whether it could continue supplying it at all. The CMA said Pfizer sold the drug at between eight and 17 times its original price to Flynn, which then sold it on at between 25 to 27 times the previous price.

“While businesses are generally free to set prices as they see fit, those that hold a dominant position have a special responsibility to ensure that their conduct does not impair genuine competition and that their prices are not excessive and unfair,” said Ann Pope, the CMA’s senior director of antitrust enforcement. “The prices that the CMA is concerned about in this case are very high compared with those prices previously charged, and have led to a big increase in the total NHS drug bill for what is a very important drug for tens of thousands of patients.”

Pfizer said selling the medicine to Flynn had made it profitable and ensured there would be a sustainable supply, which was of “paramount importance”.

David Fakes, a director at Flynn, which is based in Stevenage, Hertfordshire, said his company would defend itself vigorously against the allegations, adding that its product was priced competitively against rivals, including a tablet version of phenytoin.

The CMA said it would consider any representations from the two companies before deciding whether the law had been infringed.