Pfizer has been fined a record £84.2m by the UK’s competition regulator for overcharging the NHS 2600% for an anti-epilepsy drug, phenytoin sodium capsules. The Competition and Markets Authority (CMA) also fined Flynn Pharma, the drug’s distributor £5.2m for the overnight price hike.

An estimated 48,000 UK epilepsy patients use the drug to prevent and control seizures. The price hike rose NHS spending of the drug from £2m a year in 2012 to about £50m in 2013. The CMA said that the UK prices for the drug were many times higher compared to Europe.

Extraordinary price hike for a crucial drug

Philip Marsden, who led the investigation for the CMA stated that phenytoin sodium capsules are an old drug and there has been no recent innovation or significant investment.

"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," he added.

The phenytoin sodium capsules, which was branded Epanutin was manufactured and distributed by Pfizer before September 2012. During this time, the price was regulated. Pfizer then sold the UK rights to distribute the drug to Flynn Pharma, which de-branded the drug, making it generic. That allowed the companies to increase the price for the drug because it was no longer subject to the pricing scheme agreed to between the NHS and the drug industry, the CMA stated.

Generics are usually cheaper than branded products. However, epilepsy patients already taking phenytoin sodium capsules would not normally be switched on to other products, including another manufacturer’s version of the product, therefore the NHS had no alternative but to pay the increased prices for the drug, according to the CMA.

Drug companies’ say the drug was loss-making

Pfizer said in a statement that the drug was a loss-making product, and that the deal with Flynn "represented an opportunity to secure ongoing supply of an important medicine for patients with epilepsy". It also argued that the price was 25% to 40% less than that of an equivalent medicine from another NHS supplier.

Meanwhile, David Fakes of Flynn Flynn Pharma said, "It beggars belief that the CMA seeks to punish Flynn for selling phenytoin capsules at a significant discount to phenytoin tablets.”

However the CMA said by its calculations "all such losses would have been recovered within two months of the price rises." Adding that the price of other drugs did not permit companies to charge “excessive and unfair prices”.

Pfizer further stated, "Pfizer believes the CMA's findings are wrong in fact and law and will be appealing all aspects of the decision.”

Flynn Pharma’s chief executive, David Fakes said, “We believe that, left unchallenged, the CMA’s decision today would stunt investment in generics, eventually leading to a reduction in supply and less choice for doctors and patients. It is a matter of common interest for us to appeal and see this decision overturned.” MIMS

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Sources:
http://www.bbc.com/news/business-38233852
https://www.theguardian.com/business/2016/dec/07/pfizer-fined-nhs-anti-epilepsy-drug-cma