Big Pharma Pfizer and Flynn Pharma have been fined a total of £70m for overcharging the NHS for a life-saving epilepsy drug.
The disproportional fine comes after years of legal wrangling that always seems to favour the blatant daylight robbery of public money via the NHS by big Pharma.
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 found that Pfizer and Flynn charged unfairly high prices for phenytoin sodium capsules for over 4 years, ultimately paid for by the NHS.
The firms de-branded the drug, previously known as Epanutin, meaning it was no longer subject to price regulation and the firms could set prices at their discretion. Given 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 final price for this important anti-epilepsy medicine.
Over the following 4 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.
We are living in a world where there are no real mechanisms for accountability and fines are treated as an operating cost.
This illegal behaviour led to NHS annual costs for phenytoin capsules increasing from £2 million in 2012 to approximately £50 million the following year.
Competition and Markets Authority cuts £20mn from previous penalty after a long legal battle.
The £70m fine was apparently the highest allowed but even after the fine, Pfizer were laughing all the way to the bank, after the costs of the fine, they’d illegally profited £122m from the NHS.
To put that in perspective, it’s about the same cost as employing 2,500 nurses for a year.
Following its original investigation, the CMA previously issued an infringement decision – finding that the companies’ behaviour broke competition law – in December 2016. Pfizer and Flynn challenged this decision at the Competition Appeal Tribunal (CAT). The CAT upheld the CMA’s findings on market definition and dominance, but set aside its conclusion that the companies’ prices were an unlawful “abuse” of dominance. The CAT referred this matter back to the CMA for further consideration – known as a remittal.
The CMA originally decided to fine the companies £90mn in 2016 for abusing their dominant position. The drugmakers avoided paying the fine after winning an appeal against the CMA’s decision in 2018.
The CMA challenged this ruling at the Court of Appeal enabling it to reconsider the evidence and issue its latest ruling.
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 CMA’s appeal 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.
Following additional evidence gathering and analysis, the CMA has determined that the companies’ behaviour was an abuse of their dominant positions in their respective markets and that both Pfizer and Flynn charged unfair prices for phenytoin capsules.
Andrea Coscelli, Chief Executive of the CMA, 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.
All information about the investigation to date can be found on the Phenytoin sodium capsules: suspected unfair pricing page.
Pfizer has a history of price fixing and has even admitted to bribery in eight different countries.
Pfizer has also grown through aggressive marketing—a practice it pioneered back in the 1950s by purchasing unprecedented advertising spreads in medical journals. In 2009 the company had to pay a record $2.3 billion to settle federal charges that one of its subsidiaries had illegally marketed a painkiller called Bextra. Along with the questionable marketing, Pfizer has for decades been at the centre of controversies over its pricing. Read more…