Allegations of exorbitant pricing on the epilepsy drug phenytoin have come back to haunt Pfizer and Flynn Pharma.
Thursday, U.K.’s antitrust watchdog said it reached a tentative ruling that Pfizer and its partner Flynn broke competition law by charging “unfairly high prices” for phenytoin sodium capsules, once sold in the U.K. under the brand name Epanutin.
The decision came after a reevaluation of the case at the Competition and Markets Authority (CMA); the two companies had previously overturned fines of about £90 million first imposed by the agency in 2016.
Pfizer and Flynn allegedly “exploited a loophole” in the U.K. drug pricing system. Pfizer licensed Epanutin to Flynn Pharma in 2012, which sold it as a generic and therefore sidestepped pricing controls on branded medication, according to the CMA.
In a statement to Fierce Pharma, Pfizer said “[e]nsuring a sustainable supply [...] was at the heart of” its decision to divest Epanutin in 2012.
Over the next four years, Pfizer jacked up the prices it charged to supply Flynn with phenytoin capsules by 780% to 1,600%, and Flynn’s sticker for wholesalers and pharmacies went up as much as 2,600%, the CMA said. As a result, National Health Service spending on the anti-seizure drug jumped from £2 million in 2012 to about £50 million in 2013, the agency said.
The U.K. antitrust regulators originally fined Pfizer £84.2 million and Flynn £5.2 million in 2016. But the companies won on appeal in 2018. A tribunal at the time didn’t support the CMA’s finding that the companies’ prices were an unlawful abuse of market dominance as the agency hadn’t “correctly [applied] the legal test” to prove its case of unfair pricing.
The case was sent back to the CMA, which last March practically failed to win court backing for another appeal. So the agency launched the current probe in June 2020.
The CMA said its findings are still provisional, and that Pfizer and Flynn can respond to them before the CMA makes a decision on whether the two companies broke antitrust law. “Pfizer continues to co-operate fully with the CMA’s ongoing investigation,” the New York pharma said in its statement.
In its statement, Flynn noted the case has dragged on for years and that it has repeatedly said the CMA's case is “fundamentally flawed.”
“Although the multiple impacts of such a long-running investigation on a small pharma company are significant, Flynn will continue to work constructively and in the proper way, with the authority to bring this case to a close,” Flynn said.
The phenytoin ruling represents the latest in the CMA’s crackdown on anti-competitive behaviors in drug pricing. Just last week, the agency handed down more than £100 million in fines to Advanz Pharma for hiking the price of off-patent hypothyroid drug liothyronine by 1,110%. And that move followed on the heels of a £260 million penalty the CMA slapped on more than 10 drugmakers for jacking up the price of generic hydrocortisone tablets—which treat adrenal deficiency—by 10,000% while paying off potential rivals. The majority of that penalty went to Auden Mckenzie and Actavis UK, now known as Accord-UK.
In another concerning move for pharma, the CMA in March joined a global antitrust collaboration led by the U.S. Federal Trade Commission to review and potentially update how regulators review pharma mergers. The working group is looking at potential new approaches to analyzing the effects of large pharma transactions on innovation and drug pricing.