Pfizer and Flynn Fined £70 Million in Epilepsy Drug Price Hike Scheme

The Competition and Markets Authority (CMA) in the UK determined that Pfizer and Flynn unjustly inflated the prices of an essential epilepsy drug, resulting in the companies receiving £70 million ($83.7 million) in fines. Pfizer and Flynn took advantage of a loophole to increase drug prices, which spawned a several-year investigation into the matter.

Pfizer and Flynn’s Efforts to Exploit a Dominated Market

The saga began when Pfizer de-branded its epilepsy drug Epanutin to the genericized phenytoin sodium capsules to skirt price regulations. Despite being genericized, Pfizer and Flynn remained the dominant suppliers throughout the UK, giving the National Health Services (NHS) no option but to buy from the two companies.

Over the following four years, Pfizer charged prices 780% to 1,600% higher than they previously had. Flynn then purchased the phenytoin capsules from Pfizer and re-sold them to wholesalers and pharmacies at 2,300% to 2,600% markups than what it originally purchased from Pfizer. The cascading price hikes resulted in the NHS paying £2 million in 2012 for the drug, to £50 million the following year. 

In December 2016, the CMA found Pfizer and Flynn’s conduct to be in breach of the law and slapped a £90 million fine on the companies citing the price increase of 100mg pack of phenytoin capsules jumping from £2.83 to £67.50 between 2012 and 2013. The investigational division also said that Pfizer was known to sell the same drug in other European countries without the same price hikes. 

The companies challenged the 2016 decision, leading to the current 2020 re-investigation. Though Pfizer and Flynn disagree with the decision, they were fined £63 million and £6.7 million, respectively. Flynn’s fine represents 10% of its worldwide turnover, the maximum amount the CMA can fine a company for an infringement of competition law.

Chief Executive of the CMA, Andrea Coscelli, 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.”

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Maintaining the Sanctity of Socialized Healthcare

In a world where large corporations might have the opportunity to take advantage of broken systems, the CMA is one of many watchdog organizations around the world keeping money-hungry companies in check. 

Last year, the CMA slapped a £100 million fine on Advanz Pharma for similar unsavory practices when it was found inflating the prices of thyroid tablets. Advanz’s thyroid tablets were also a genericized version of the drug, but like Pfizer, Advanz gained market dominance for the liothyronine tablets, forcing the NHS to pay exorbitant prices for years. 

The UK’s healthcare system is one of its greatest achievements, and it is pleasant to know that watchdogs like the CMA are ready to protect the system, which helps so many people each year. The recent fines imposed on Pfizer and Flynn serve as a stark reminder that while pharmaceutical companies are developing life-saving products, their business practices still need to be kept in check for the greater good of the public. 

Author

Reed Slater