Drugs giant Pfizer has been handed the largest-ever fine for breaches of competition law after it was ruled to have charged the NHS "excessive and unfair prices", says Sky News.
The Competition and Markets Authority said the company "deliberately" de-branded epilepsy drug Epanutin in 2012 and then increased its price by 2,600 per cent.
Branded medications are typically subject to a bespoke NHS contract and have a regulated price. These controls are lifted if the drug becomes "generic", reports Sky, as this in theory opens up competition from rival providers.
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However, there have been a number of cases where companies are accused of using the process to raise prices when a drug has no direct competition.
Pfizer continued to manufacture the drug, which was given the generic name phenytoin, but sold the contract for distributing Epanutin to Flynn Pharma.
It then increased its prices by eight to 17 times, while Flynn charged the NHS 25 to 27 times the old price.
"The CMA said the amount the NHS was charged for 100mg packs of the drug rocketed from £2.83 to £67.50, before coming down to £54 from May 2014," says Sky. "NHS expenditure… rose from about £2m a year in 2012 to about £50m in 2013."
The ruling also claims Pfizer charged the NHS much more than it was selling the medication for "in any other European country".
Pfizer was handed a record £84.2m fine and Flynn Pharma was penalised £5.2m.
The penalty is well in excess of the £58m handed down to British Airways in 2012, the previous record for a competition breach, reports The Guardian.
A spokesman for Pfizer said it "believes the CMA's findings are wrong in fact and law and will be appealing all aspects of the decision".
He added that the drug was loss-making before the Flynn transaction and the deal secured "ongoing supply of an important medicine", while being "between 25 and 40 per cent less than the price of the equivalent medicine" also sold to the NHS.
Flynn Pharma accused the CMA of having a "wholly flawed understanding" of the UK market.
Pfizer and Flynn accused of law breach which cost NHS millions
6 August 2015
The UK's competition regulator has alleged that US drugs giant Pfizer and UK-based distributor Flynn Pharma breached the law over sales of epilepsy drugs, costing the NHS tens of millions of pounds.
In a statement of objections, the Competition and Markets Authority says the breaches took place after Pfizer sold UK distribution rights for the drug Epanutin to Flynn in September 2012. It claims that Pfizer continued to manufacture the drug, hiking the wholesale price to between 8 and 17 times its previous UK rate. Flynn then sold it on for 25 to 27 times its old price.
It states that the NHS had spent £2.3m on Epanutin in 2012, a sum which rose to £50m in 2013 and £40m in 2014. Ann Pope, CMA senior director, said that although "businesses are generally free to set prices as they see fit", Pfizer and Flynn held a dominant position and therefore had a "special responsibility" to ensure their prices do not "impair genuine competition" and are not "excessive and unfair".
The Daily Telegraph notes the report is provisional and do not constitute a finding that the law has been breached. It adds that the regulator has the power to impose a fine of 10 per cent of a firm's annual global turnover, which for Pfizer would equate to $5bn (£3.2bn).
Both Pfizer and a representative of Flynn told the paper that the companies are cooperating fully with the CMA. Flynn director David Walters said it would "vigorously defend itself against the allegations", while Pfizer said in a statement that ensuring "a sustainable supply of our products to UK patients" was of "paramount importance".
The CMA's move follows a similar statement of objections issued to Royal Mail in July, relating to an aborted increase in prices last year for third-party carriers to use its delivery network.
