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Decision expected in CMA’s phenytoin sodium unfair pricing investigation in September 2016

The CMA has amended its case timetable in its investigation into alleged excessive and unfair prices for phenytoin sodium capsules under Chapter II of the Competition Act 1998 and Article 102 of the Treaty on the Functioning of the European Union so that a decision is now expected in September 2016 rather than in August 2016.

The CMA’s provisional view outlined in its Statement of Objections to Pfizer and Flynn Pharma of 06 August 2015 is that each of these companies abused a dominant position by charging excessive and unfair prices in the UK for phenytoin sodium capsules, an anti-epilepsy drug used by tens of thousands of patients in the UK daily to prevent and control seizures, in breach of UK and EU competition law.

Prior to September 2012, Pfizer manufactured and sold phenytoin sodium capsules to UK wholesalers and pharmacies under the brand name Epanutin®. Subsequent to September 2012, Pfizer sold the UK distribution rights for Epanutin® to Flynn Pharma. Flynn Pharma de-branded or genericised the drug and started selling its own version which Pfizer continued to manufacture. Under these new arrangements, Pfizer sold the drug to Flynn Pharma at prices which the CMA says were “significantly higher than those at which it had previously sold Epanutin® in the UK – between 8 and 17 times Pfizer’s historic prices” and Flynn Pharma then sold the drug on to customers at prices which were “between 25 and 27 times higher than those historically charged by Pfizer”.

Before Pfizer’s sale of the distribution rights for Epanutin® to Flynn Pharma, the NHS spent around £2.3 million on phenytoin sodium capsules annually. After the deal, this spend had risen to £50 million in 2013 and more than £40 million in 2014.

The CMA’s provisional view and findings do not necessarily mean that competition law has been breached. In the decision expected in September 2016, the CMA will decide whether there has been any infringement of competition law.

The arrangements between Pfizer and Flynn Pharma are the latest example of drug companies imposing massive price rises for relatively commonly prescribed unbranded generic drugs which have been available for many years. Such price rises obviously detrimentally affect the budget of the NHS and this has no doubt driven the CMA to investigate Pfizer and Flynn Pharma in this instance.  

To discuss any competition law issues with our EU & Competition Law department please contact Julian Maitland-Walker or Sheree-Ann Virgin.