The UK's competition regulator, the Competition and Markets Authority (CMA), has achieved a significant legal breakthrough in its protracted battle with US pharmaceutical giant Pfizer. The watchdog has secured permission to appeal against a previous decision by the Competition Appeal Tribunal (CAT) in a case centring on allegations of excessive pricing for a crucial anti-epilepsy drug.
This development follows a decade-long legal tussle, which began with an investigation into the pricing of phenytoin sodium, a medication vital for thousands of epilepsy patients. The court's recent judgment asserted that the CAT had been "wrong to set aside the [CMA’s] decision" regarding its investigation into the companies' pricing practices. Furthermore, the court found that the CAT had "failed to engage with, or mischaracterised, the CMA’s decision on critical issues" and dismissed claims that the CMA's evidence examination was biased.
The controversy originated in 2013 when the CMA launched an investigation into suspected pricing issues. In 2015, the regulator alleged that Pfizer and its UK distributor, Flynn Pharma, were abusing their market dominance by charging the NHS and other customers prices up to 27 times higher than historical rates. This dramatic increase followed Pfizer's sale of its UK distribution rights for phenytoin sodium to Flynn Pharma in September 2012. Flynn Pharma then began selling an unbranded version of the drug, which Pfizer continued to manufacture, but at prices significantly inflated – up to 17 times higher than Pfizer's previous charges to Flynn Pharma.
Before 2012, the NHS spent approximately £2.3 million annually on the drug. However, this expenditure dramatically escalated to over £50 million in 2013 and remained above £40 million in 2014, highlighting the substantial financial impact of the alleged price manipulation. The CMA initially levied fines of £84.2 million against Pfizer and £5.2 million against Flynn Pharma in 2016, ordering them to reduce their prices. These fines were appealed, leading to a complex series of legal challenges and a reopening of the investigation, resulting in revised fines of £63.3 million for Pfizer and £6.7 million for Flynn Pharma in 2022.
Juliette Enser, executive director of competition enforcement at the CMA, emphasised the importance of the judgment, stating that the drug is "vital" and "relied on by thousands to prevent life-threatening seizures." She reiterated the CMA's finding that the companies had exploited their market positions to charge the NHS excessive prices. The court will now consider further submissions from both parties before making a final decision on whether to reinstate the CMA’s initial findings, including the imposed fines.
Source: City A.M.