Pfizer (NYSE:PFE) and Flynn Pharma have appealed the record $107 million (£84.2 million) and $6.5 million (£5.2 million) fines imposed by the U.K. Competition & Markets Authority in December for the companies’ massive price hikes to their unbranded versions of anti-epilepsy drug Epanutin.
In its appeal, Pfizer claims that the regulator did not consider market realities when it fined the drugmaker, saying “Pfizer challenges the CMA’s conclusion that it was dominant within the relevant market: the market for the manufacture of Pfizer-manufactured phenytoin sodium capsules that are distributed in the UK. The unrealistically narrow market identified by the CMA flies in the face of the contemporaneous evidence. Furthermore, the CMA’s conclusions on dominance fail to take into account the very substantial countervailing buyer power of the Department of Health.”
New York City-based Pfizer used to market the phenytoin sodium anti-epilepsy treatment as the branded drug Epanutin. The company sold the rights to Flynn in September 2012 and Flynn debranded the drug, removing it from the scrutiny of price regulation, and hiked the price of the capsules by 2,600% to a peak of £67.50 – about $85.16 in today’s dollars – before dropping to £54.00 ($68.11 today).
“The companies deliberately exploited the opportunity offered by debranding to hike up the price for a drug which is relied upon by many thousands of patients,” CMA’s case decision group chairman Philip Marsden said when the group made its original decision, according to Reuters.
The CMA explained that British prices for the drug were higher than anywhere else in Europe and that Britain’s National Health service spent £50 million ($58.3 million) in 2013 for the capsules, a 2,400% jump from the year before.
“Phenytoin capsules were a loss-making product for Pfizer and the Flynn transaction represented an opportunity to secure ongoing supply of an important medicine for patients with epilepsy, while maintaining continuity of manufacture,” Pfizer said in a statement. “When Flynn launched its product, the company set a price that was between 25 and 40% less than the price of the equivalent medicine from another supplier to the NHS which had long been regulated, and appeared to be acceptable to, the Department of Health.”
“Phenytoin sodium capsules are already less expensive than the alternative equivalent drugs in the U.K. market,” a Flynn spokesman said, according to Bloomberg. “It beggars belief that the CMA seeks to punish Flynn for selling phenytoin capsules at a significant discount to phenytoin tablets.”
Pfizer and Flynn asked for the decision to be annulled and for the fines to be reduced or set aside. Pfizer also wrote that it wants the regulatory agency to pay its cost for the appeal.
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