Britain’s competition regulator imposed a record 84.2 million pound ($106 million) fine on the pharmaceutical manufacturer Pfizer, and a 5.2 million pound ($6.55 million) fine on the distributor Flynn Pharma after finding that each broke competition law by charging excessive and unfair prices for an anti-epilepsy drug.
The Competition and Markets Authority (CMA) also ordered the companies to reduce their prices.
The fines the highest the CMA has imposed follow prices increase by up to 2,600 per cent overnight after the drug was deliberately de-branded in September 2012, the CMA said in a statement.
Pfizer rejected the findings and said it would appeal against the decision, BBC reported.
In order to ensure that there should be no risk to the ongoing supply of phenytoin sodium capsules to those patients who rely on it, the competition regulator has given Pfizer and Flynn between 30 working days and four months to reduce their respective prices.
As a result of the price increases, Britain’s National Health Service (NHS) expenditure on phenytoin sodium capsules increased from about 2 million pounds ($2.52 million) a year in 2012 to about 50 million pounds ($63 million) in 2013, the CMA noted.
The prices of the drug in Britain have also been many times higher than Pfizer’s prices for the same drug in any other European country, the regulator said.
Phenytoin sodium capsules are used in the treatment of epilepsy to prevent and control seizures and are an important drug for an estimated 48,000 patients in Britain.
Epilepsy patients who are already taking phenytoin sodium capsules should not usually be switched to other products, including another manufacturer’s version of the product, due to the risk of loss of seizure control which can have serious health consequences.
As a result, the NHS had no alternative to paying the increased prices for the drug.
Prior to September 2012, Pfizer manufactured and sold phenytoin sodium capsules to UK wholesalers and pharmacies under the brand name Epanutin and the prices of the drug were regulated.
In September 2012, Pfizer sold the distribution rights for Epanutin to Flynn Pharma, which de-branded the drug, meaning that it was no longer subject to price regulation.
“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,” said Philip Marsden, Chairman of the Case Decision Group for the CMA’s investigation.
Since September 2012, Pfizer has continued to manufacture phenytoin sodium capsules and has supplied them to Flynn Pharma at prices that were significantly higher than those at which it previously sold Epanutin in Britain.
Flynn Pharma then sold on the products to wholesalers and pharmacies in Britain charging them prices which have been between 2,300 per cent and 2,600 per cent higher than those they had previously paid for the drug.
The final decision and fines relate to both the prices that Pfizer has charged to Flynn Pharma and the prices that Flynn Pharma has charged to its customers, since September 2012, the CMA said.
Although Pfizer has claimed that Epanutin was loss-making before it was de-branded, the CMA calculated that, according to Pfizer’s figures, all such losses would have been recovered within two months of the price rises.
Both companies will continue to be able to charge prices which are profitable, but their prices must not be excessive and unfair, the CMA said.