£84.2m fine for Pfizer after NHS over-charged as price of drug hiked 2,600%
Pfizer has been fined a record £84.2 million by the competition watchdog for its role in over-charging the NHS after the price of an epilepsy drug was hiked by up to 2,600% overnight.
The Competition and Markets Authority (CMA) also fined distributor Flynn Pharma £5.2 million after it accused the pair of "excessive and unfair" pricing for a vital medicine used by around 48,000 patients in the UK.
In handing out its biggest ever fine, the watchdog said the "extraordinary" price hikes cost the NHS and taxpayer tens of millions of pounds.
It comes amid a government crackdown on drug pricing abuse over fears firms are using generic versions of medicines to exploit an NHS loophole.
The CMA said the NHS saw the cost of phenytoin sodium capsules, which are used to prevent and control seizures, rocket by between 2,300% and 2,600% overnight in September 2012 after it was deliberately debranded.
US-based Pfizer has rejected the findings and plans to appeal against the decision.
Pfizer makes the drug and sells it to Flynn, which in turn sells it to the NHS.
Pfizer used to make and sell the drug under the brand name Epanutin, but sold the UK distribution rights to Flynn in September 2012.
It was then debranded, meaning that it was no longer subject to price regulation and both firms were free to ramp up the price.
The CMA said the NHS at one stage saw the price of 100mg packs of the drug jump from £2.83 to £67.50.
The hikes meant the cost to the NHS rocketed from around £2 million a year in 2012 to about £50 million in 2013.
The CMA said UK prices were many times higher than elsewhere in Europe.
But the NHS had no alternative but to pay , as e pilepsy patients who are already taking the drug should not usually be switched to other products due to the risk of loss of seizure control.
Philip Marsden, chairman of the case decision group for the CMA's investigation, said: "The companies 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.
"These extraordinary price rises have cost the NHS and the taxpayer tens of millions of pounds."
He added: " 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 behaviour."
Pfizer claimed the anti-epilepsy drug was loss-making before it was de-branded, but the CMA found any losses would have been recouped within two months of the price rises.
Both firms have now been given up to four months to reduce their prices.
Pfizer said its distribution rights deal with Flynn "represented an opportunity to secure ongoing supply of an important medicine for patients with epilepsy".
It added the increased price of the drug was still 25% to 40% lower than the cost of an equivalent medicine by another supplier to the NHS.
Flynn Pharma said it will also appeal against the decision.
David Fakes, chief executive of Flynn Pharma, said fines for selling phenytoin capsules for less than phenytoin tablets "beggars belief".
Epilepsy Action condemned Pfizer and Flynn for "unacceptable" behaviour.
Simon Wigglesworth, deputy chief executive at Epilepsy Action, said: "Drug price increases mean that the NHS spends more money on the same patient outcomes. This money could be better spent in other areas of epilepsy care, for example specialist nurse posts."
The Department of Health said its Bill to control generic drugs prices passed through the House of Commons on Tuesday.
A spokesman added: "W e are absolutely determined to ensure that no pharmaceutical company can exploit the NHS.
"We very much welcome the fines issued today, which show that any such exploitation will not be tolerated."