The U.K.’s Competition & Markets Authority reportedly fined Pfizer (NYSE:PFE) and Flynn Pharma a record amount for the companies’ massive price hikes to their unbranded versions of anti-epilepsy drug Epanutin. The British anti-trust watchdog fined Pfizer and Flynn Pharma $107 million (£84.2 million) and $6.5 million (£5.2 million), respectively.
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, 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.
The CMA ordered the companies to reduce their prices, but both Pfizer and Flynn have said it will appeal the results of the investigation.
“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.”
The watchdog has 4 ongoing investigations into pharmaceutical companies, Reuters reported. In February, CMA fined GlaxoSmithKline (NYSE:GSK) £37.6 million ($47.4 million) for arranging a delayed launch of the cheap, generic copy of its antidepressant Seroxat.
Before the record fine against Pfizer, the highest fine was given to British Airways in 2012 by the organization’s predecessor, the Office of Fair Trading. British Airways was charged £58.5 million ($73.8 million) for colluding with Virgin Atlantic on fuel surcharges.
“This is the highest fine the CMA has imposed and it sends out a clear message to the sector that we are determined to crack down on such behavior,” Marsden said.
(£1 = $1.26079)