06.08.15
Drug firms accused of overcharging NHS by millions
Drug firms Pfizer and Flynn Pharma have been accused of abusing a dominant position by charging the NHS “excessive and unfair prices” for an important anti-epilepsy medication.
The Competition and Markets Authority (CMA) found that the companies may have been breaching UK and EU competition law by taking advantage of their market dominance to raise the prices of phenytoin sodium capsules, upping the NHS drug bill by millions of pounds.
The drugs are used in the treatment of epilepsy to prevent and control seizures for over 50,000 patients in the country. Pfizer is responsible for supplying the capsules to Flynn Pharma, which then distributes them to wholesalers.
Prior to 2012 Pfizer was responsible for both manufacturing and distributing the drug under the brand name Epanutin. It later sold distribution rights to Flynn Pharma which then genericised the pill.
The CMA found that Flynn Pharma was selling the unbranded version for prices between 25 to 27 times higher than those historically charged by Pfizer. It also stated that Pfizer was charging Flynn between eight and 17 times more money for the drug than what it originally sold for before the de-branding.
As a result the NHS went from spending £2.3m annually on the drug to just over £50m in 2013 and over £40m in 2014.
Ann Pope, CMA senior director of antitrust enforcement, said: “While businesses are generally free to set prices as they see fit, those that hold a dominant position have a special responsibility to ensure that their conduct does not impair genuine competition and that their prices are not excessive and unfair.
“The prices that the CMA is concerned about in this case are very high compared to those prices previously charges and have led to a big increase in the total NHS drug bill for what is a very important drug for tens of thousands of patients.”
However she said that the authority’s findings are provisional and no conclusion can be drawn at this stage to confirm any breach of competition law.
“We will carefully consider any representations from Pfizer and Flynn Pharma before deciding whether the law has been infringed,” she added.
The Competition Act 1998 prohibits the abuse of a dominant position which may affect trade within the UK and, should the allegations be true, CMA may impose a penalty of up to 10% of its annual worldwide turnover.
Pfizer said in a statement: “Ensuring a sustainable supply of our products to UK patients is of paramount importance to Pfizer and was at the heart of our decision to divest the product.”
It added that it is now “cooperating fully” with the investigation.
Both parties will now have the opportunity to reply before any final decisions are made.
(Top image c. Gareth Fuller, PA Images)