UK Competition And Markets Authority Accuses Pfizer Of Illegal Pricing Of Its Epilepsy Drug

Pfizer Inc (NYSE: PFE) and Flynn Pharma Ltd have been accused by the U.K.'s competition watchdog of illegally overcharging the National Health Service (NHS) for anti-epilepsy drugs.

What Happened: The Competition and Markets Authority (CMA) said that the companies used a loophole to charge unfairly high prices for phenytoin sodium capsules by debranding the drug, known as Epanutin, in 2012 so it would not face price regulation.

In 2016, CMA imposed an £84.2 million fine on Pfizer, and a £5.2 million fine on the distributor Flynn Pharma, finding that the companies broke competition law by increasing the price of its drug phenytoin sodium by 2,600%.

The NHS was charged £67.50 for 100mg packs in 2013, up from £2.83 in 2012, thus increased expenditures from about £2 million to £50 million.

In 2018, the U.K.'s Competition Appeal Tribunal (CAT) upheld the CMA's findings on market definition and dominance. Still, they set aside the CMA's conclusion that the companies' prices were an unlawful "abuse" of dominance.

Why It Matters: The CMA has now provisionally found that Pfizer and Flynn Pharma exploited a loophole. As Pfizer and Flynn were the dominant suppliers of phenytoin sodium in the U.K., the NHS had no choice but to pay the high prices.

Pfizer and Flynn now have a chance to respond to the CMA's accusations.

Price Action: PFE shares are down 0.62% at $44.91 during the market session on the last check Thursday.

Image by Okan Caliskan from Pixabay