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Pfizer successfully appeals 2,600% price hiking case

Published on 08/06/18 at 11:51am

Pfizer and co-defendant Flynn Pharma have won their appeal against a £90 million fine imposed on them by the Competition and Markets Authority (CAM).

The CAM revealed that it may well choose to appeal the decision, which the Competition Appeal Tribunal found in Pfizer and Flynn’s favour after deciding that they had not abused their dominance of the market.

The particular market was for the treatment of epilepsy and the two companies’ sale of phenytoin sodium capsules.

The CAM investigated the pricing of the drug, after it was revealed that there was a large increase in the price of the drug in September 2012, seeing its price skyrocket by 2,600%. This represented a shift in price from £2.83 to £67.50, meaning that the NHS was forced to increase its expenditure on the drug from £2 million in 2012 to £50 million in 2013.

Pfizer had actually sold the rights of the drug to Flynn in September 2012 but still produced the drug for Flynn, taking a home a portion of the increased profits.

The issue at the heart of the decision is whether the companies abused their position as sole suppliers of the medication to charge excessive prices for the drug.

The Tribunal concluded, “We understand the CMA’s concern to deter and punish instances of unfair pricing that infringe the law. However, we have found this particular decision to be wrongly based in certain respects. Whilst we find the CMA was correct that the two companies each held a dominant position, we find the CMA’s conclusions on abuse of dominance were in error. The CMA did not correctly apply the legal test for finding that prices were unfair; it did not appropriately consider what was the right economic value for the product at issue; and it did not take sufficient account of the situation of other, comparable, products, in particular of the phenytoin sodium tablet. This means that the CMA’s findings on abuse of dominance in this case cannot be upheld.”

The CAM took issue with this conclusion, stating in a press release on the decision that: “The CMA conducted an in-depth investigation during which it carefully considered the applicable law and evidence from a wide variety of sources. The legal test used has recently been applied in similar cases involving unfairly high pharmaceutical prices in other countries applying the same EU law.”

Ben Hargreaves

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