The Competition and Markets Authority (CMA) fined the company based on findings that the cost of the drug in the UK was significantly higher than in Europe. The government watchdog argued that Pfizer “deliberately exploited the opportunity offered by de-branding to hike up the price for a drug which is relied upon by many thousands of patients” after they sold the UK distribution rights to Flynn Pharma. The CMA attribute a £2 million increase in NHS spending on the anti-epilepsy drug, phenytoin sodium capsules, to the price hike pointing to a 2,600% overnight increase in 2012.
The NHS argue that “patients who are already taking phenytoin sodium capsules should not be switched to other products, including another manufacturer’s version of the product due to the risk of loss of seizure control which can have serious health consequences” as a result of which the NHS do not have a choice but to continue to incur the higher cost.
According to chief executive of Flynn Pharma, David Fakes, the decision could be harmful to the public in the long run as if “left unchallenged, the CMA's decision … would stunt investment in generics, eventually leading to a reduction in supply and less choice for doctors and patients”. Pfizer, furthermore, claim that their product is still 25-40% cheaper than the equivalent product of an alternative NHS supplier - phenytoin tablets – which has long been regulated and deemed acceptable by the Department of Health. They argue that Phenytoin capsules were, in fact, a loss making product “and the Flynn transaction represented an opportunity to secure ongoing supply of an important medicine for patients with epilepsy, while maintaining continuity of manufacture”. On this basis Pfizer maintain that the CMA’s findings are false and will be appealing to overturn the decision. Pfizer believe that “the ruling highlights real policy and legal issues concerning the respective roles of both the Department of Health and the CMA, in regulating the price of pharmaceutical products in the UK”.
Sobashni DeSilva, Director of the Duncan Lewis Litigation/Dispute Resolution team, had the following to say on the issue:
“We cannot assess this ruling in isolation. The issue runs in the vein of this giant industry and goes beyond the UK. For decades Pharmaceutical companies have been accused of monopolising the pricing and exploiting the NHS especially by re branding drugs to increase prices, at a cost to the tax payer.
Martin Shkreli, former head of Turing Pharmaceuticals (America) was caught up in an investigation early this year amidst allegations that Turing increased the price of drug, Daraprim (used by many AIDS patients) by 5,000%. Other members of the pharmaceutical industry, including the head of Valeant Pharmaceuticals, were also asked to testify. Valeant increased the price of Isuprel, a drug used to treat slow heart rate by 500% and Nitropress used to treat hypertension by 200%.
The pricing should be embedded in the quality and the effect of the drug that requires careful research and development. It should not be outrageous but justifiable.
Both Pfizer and Flynn Pharma have threatened appeals. It would be interesting to see how the appeals will be determined by the higher courts and the ruling. Watch this space!"
Sobashni DeSilva is a director of the Litigation/Dispute Resolution team at Duncan Lewis. She litigates across a broad range of areas such as commercial contracts, professional negligence, banking disputes, pharmaceutical- contractual disputes; defamation, civil fraud, misrepresentation claims and international cross- border litigation.
Duncan Lewis is one of the leading solicitors in England and Wales offering expert litigation and alternative dispute resolution services. Duncan Lewis offers in-house alternative dispute re resolution services to both corporate clients and private individuals – and our litigation team believes in securing the best outcome for our clients. When it is not possible to resolve a matter through alternative dispute resolution we will take swift action to protect our client’s interests and offer the best representation. If you or your business is facing issues with regulatory bodies or market competition, please do not hesitate contact our team of expert litigation solicitors on 033 3772 0409.