The US drug giant Pfizer and Hertfordshire company Flynn Pharma have been accused of overcharging the NHS by millions of pounds after the bill for epilepsy drugs jumped by almost £48m in two years.
The Competition and Markets Authority (CMA) has accused the two companies of charging “excessive and unfair” prices for the drug Phenytoin Sodium, which is used by 50,000 epilepsy sufferers in the UK.
In a strongly worded statement of objections, the competition watchdog said the companies were abusing their dominant position and that their prices were “very high compared to those prices previously charged, and have led to a big increase in the total NHS drug bill for what is a very important drug for tens of thousands of patients”.
Pfizer makes Phenytoin Sodium capsules, which epileptics use to control seizures, and supplies them to Flynn Pharma, which has distributed them to UK wholesalers and pharmacies since acquiring the distribution rights from Pfizer in September 2012.
At this point, Flynn Pharma removed the Pfizer brand “Epanutin” from the drug and began selling its own version.
Pfizer sold the drug at 8-17 times its historic price to Flynn, which then sold it on at 25-27 times more than the previous price, the competition watchdog said. According to the CMA’s statement, the NHS spent £2.3m a year on the capsules before September 2012. The bill surged to more than £50m in 2013.
If Pfizer and Flynn Pharma are found to have breached competition law, they could be fined as much as 10 per cent of their global turnover. In Pfizer’s case, this was $50bn (£32bn) last year.
Both companies will now respond to the allegations, before the CMA’s final response next year. In a statement, Pfizer pointed out that the watchdog’s findings were only provisional and said: “Ensuring a sustainable supply of our products to UK patients is of paramount importance to Pfizer and was at the heart of our decision to divest the product. Pfizer is co-operating fully with the… investigation.”
Pfizer shocked the British corporate world in 2014 when it launched a £63bn hostile takeover bid for AstraZeneca, one of the biggest companies on the FTSE.
However, the American giant lost out after AstraZeneca succeeded in convincing the Government and investors to support its bid to stay independent.
The pharmaceutical sector has been caught up in a wave of transatlantic dealmaking since Pfizer’s initial move, as companies rush to reap economies of scale. Another US company, AbbVie, tried to buy the British-founded but Dublin-based Shire, then earlier this week Shire launched a $30bn hostile bid for the rare disease specialist Baxalta.
Deals in the pharmaceutical and biotech sector have totalled $334bn worldwide so far this year, according to the financial software firm Deal-ogic. This is more than twice the total in the same period last year and five times the level seen in 2012.
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