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12 March 2020Big PharmaEdward Pearcey

Phenytoin judgment will help clarify unfair pricing tests, says UK’s CMA

The UK Competition and Markets Authority ( CMA) has welcomed a Court of Appeal ruling allowing it to press ahead with cases against Pfizer and Flynn Pharma over the unfair pricing of an epilepsy treatment.

According to a statement, published on Tuesday, March 10, the CMA called the decision “an important step forward in clarifying the legal test for excessive and unfair pricing”.

The latest ruling follows an earlier decision from the Competition Appeal Tribunal ( CAT) in 2018, in which the tribunal provisionally decided to remit the case back to the CMA for further consideration, after ruling against the CMA’s finding of abuse.

The CMA appealed, and the Court of Appeal subsequently found that the CAT had made several fundamental legal errors, including the misapplication of seminal EU case law, according to the CMA statement.

“Today’s judgment is a good result,” said Andrea Coscelli, chief executive, CMA. “The CMA was right to appeal the CAT’s judgment. We will now get on with the elements of the case against Pfizer and Flynn Pharma that the court has decided to refer back to us.”

Specifically, the CAT was wrong to require the CMA to go beyond a cost-plus calculation (adding a fixed percentage to the cost to produce one unit of a product) in order to determine whether the prices by Pfizer and Flynn were excessive.

The presiding judge, Rt Hon Sir Geoffrey Vos, when speaking of CAT’s decision, said: “It was quite easy to lose sight of a stark reality, which was that, literally overnight, Pfizer and Flynn increased their prices for phenytoin sodium capsules by factors of between approximately 7 and 27, when they were in a dominant position in each of their markets.”

In December 2016, the CMA fined Pfizer and Flynn nearly £90 million ($113 million) for charging excessive prices for phenytoin to the National Health Service ( NHS).

A record £84.2 million fine was placed on Pfizer, and a £5.2 million fine on the distributor Flynn Pharma, after finding that each broke competition law by charging excessive and unfair prices in the UK for phenytoin sodium capsules.

The fines follow increases of up to 2,600% overnight after the drug was deliberately de-branded (relaunching the product as a generic as a way to circumvent the pricing regulations) in September 2012.

For example, the amount the NHS was charged for 100mg packs of the drug rose from £2.83 to £67.50, before reducing to £54.00 from May 2014.

As a result of the price increases, NHS expenditure on phenytoin sodium capsules increased from about £2 million a year in 2012 to about £50 million in 2013, according to UK government figures.

Phenytoin is a prescription-only medication used to treat epilepsy, but can also be used to treat trigeminal neuralgia, a condition involving facial nerve pain.

Back in the summer of 2019, drugmaker Aspen offered to pay the NHS £8 million to resolve competition concerns, following a separate CMA’s investigation.

The payment, which formed part of a wider proposed package, followed an investigation into suspected anti-competitive arrangements regarding the supply of fludrocortisone acetate 0.1 mg tablets.

Both Pfizer and Flynn Pharma have been contacted for comment.

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4 March 2019   The UK Competition and Markets Authority has provisionally found that pharmaceutical companies Auden Mckenzie and Waymade engaged in anti-competitive behaviour relating to hydrocortisone tablets.
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15 August 2019   Drugmaker Aspen has offered to pay the UK’s National Health System £8 million to resolve competition concerns.

More on this story

Big Pharma
4 March 2019   The UK Competition and Markets Authority has provisionally found that pharmaceutical companies Auden Mckenzie and Waymade engaged in anti-competitive behaviour relating to hydrocortisone tablets.
Big Pharma
15 August 2019   Drugmaker Aspen has offered to pay the UK’s National Health System £8 million to resolve competition concerns.