CMA accuses Pfizer, Flynn of overcharging NHS for phenytoin sodium capsules

The Competition and Markets Authority (CMA) has accused Pfizer and Flynn of overcharging the NHS for vital anti-epilepsy drugs, after reassessing the case.

According to the CMA's investigation, Pfizer and Flynn broke competition law by charging unfairly high prices for phenytoin sodium capsules.

The CMA has provisionally found that the companies exploited a loophole by de-branding the drug – known as Epanutin prior to September 2012 – with the effect that the drug was not subject to price regulation in the way branded drugs are. 

Following the overnight price increases by the companies, NHS spending on phenytoin sodium capsules rose from around £2 million a year in 2012 to about £50 million in 2013. For over 4 years, Pfizer’s prices were between 780 per cent and 1,600 per cent higher than it had previously charged. Pfizer then supplied the drug to Flynn, which sold it to wholesalers and pharmacies at prices between 2,300 per cent and 2,600 per cent higher than those they had paid previously.

In December 2016 the CMA fined Pfizer and Flynn for breaking competition law by charging unfairly high prices for phenytoin sodium capsules.

The companies appealed against the CMA’s decision that competition law had been broken and against the fine. In June 2018, the Competition Appeal Tribunal (CAT) upheld the CMA’s findings on market definition and dominance but set aside the CMA’s finding that the companies’ prices were an unlawful “abuse” of dominance. 

The CAT referred the matter of abuse back to the CMA for further consideration – known as a remittal.

The CMA and Flynn then appealed to the Court of Appeal. In March 2020 the Court 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.

Following this, the CMA decided to re-investigate the matters remitted by the CAT and opened its current investigation in June 2020.

Andrea Coscelli, Chief Executive of the CMA, said: "Thousands of patients depend on this drug to prevent life-threatening seizures as a result of their epilepsy. 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."

The CMA recently fined firms £260 million for competition law breaches in relation to the supply of hydrocortisone tablets and £100 million for competition law breaches in relation to the supply of liothyronine tablets. A number of other CMA investigations are continuing.