Pfizer and Flynn Pharma fined £69m for ‘excessive’ pricing of epilepsy drug

Medicine manufacturers Pfizer and Flynn Pharma have been fined a combined total of £69m for “charging excessive prices” for phenytoin sodium capsules, used in the treatment of epilepsy, between 2012 and 2016.

The fine imposed by the Competition Appeal Tribunal (CAT), a specialist judicial body that hears cases related to competition regulatory issues, represents a £21m reduction on the fine initially imposed in 2016 in relation to the price increases.

In a statement published on 20 November 2024, the Competition and Markets Authority (CMA) said the tribunal had made the decision following a reassessment of a case heard in 2016.

In its original investigation in 2016, the CMA found that Pfizer and Flynn had used their dominant positions in the market to charge “excessive and unfair prices” for phenytoin sodium capsules between 2012 and 2016.

It said that Pfizer and its distributor Flynn had increased prices by 2,300–2,600%, resulting in annual costs to the NHS increasing from £2m in 2012 to approximately £50m in 2013. It, therefore, concluded that the companies had breached competition law and fined the two companies £90m.

Both Pfizer and Flynn challenged this decision at the time, but the tribunal upheld the CMA’s findings, aside from its conclusion that the drug prices were an “unlawful abuse of dominance”.

The tribunal then referred the case back to the CMA for further consideration — known as a ‘remittal’.

Following this, the CMA re-opened the investigation in 2020, issuing a ‘remittal decision’ in 2022, in which it imposed a combined fine of £69m on the parties: £63.3m for Pfizer and £6.7m for Flynn.

Both companies appealed the decision, with their arguments including that “the CMA had failed to consider real-world facts and matters in their decision, choosing to follow a theoretically over-rigid approach”.

The tribunal’s November 2024 judgement is the outcome of the appeals. It ruled that the parties had intentionally abused their dominant positions in the market and that “both Pfizer and Flynn were gouging the market in a manner that can only be characterised as unjustifiable or opportunistic, or — in a word — unfair”, the judgement said.

“This is something that Pfizer and Flynn intended. They did not accidently or negligently overprice. They had market power given them; and they abused it,” it added.

The CMA said in a statement that the tribunal had “agreed with most of the drug firms’ grounds of appeal, finding against the CMA in a number of matters, including in relation to the approach to calculating a ‘reasonable rate of return’, its assessment of unfairness and the overall procedure followed”.

But it added that the tribunal “concluded that the firms had infringed the Chapter II prohibition of the Competition Act 1998”.

“On the basis of those infringement findings, the CAT imposed the same level of fines as the CMA, but for a 1% reduction of Pfizer’s fine,” it said.

In a statement, a spokesperson for Pfizer said: “Pfizer respectfully disagrees with the CAT’s approach in this matter — the company is considering all options. 

“The CAT fully set aside the CMA’s finding of infringement against Pfizer, identifying ‘material errors’ in the CMA’s approach, finding that the CMA’s decision reflected a ‘confirmation bias’ and was procedurally unfair. 

“Despite these fundamental failings in the CMA’s approach, the CAT decided to remake the decision on a different basis and with which we profoundly disagree. 

“We maintain that we approached this divestment, as with all our business operations, with integrity and believe it fully complies with established competition law.”

Flynn Pharma was approached for comment.