Drugmakers Pfizer and Flynn Pharma have formally launched an appeal against a £70 million ($84 million) fine levied by the UK Competition and Markets Authority (CMA) for overcharging the NHS for a widely-used epilepsy drug.
The two drugmakers were fined in July, after the CMA upheld a preliminary judgment that Pfizer and Flynn had abused a dominant position in phenytoin sodium capsules, causing NHS spending on the drug to swell from around £2 million a year in 2012 to £50 million the following year.
Pfizer’s fine totalled £63 million, with Flynn on the hook for £7 million over allegations they exploited a loophole by de-branding phenytoin sodium capsules – formerly known as Epanutin – so they were no longer subject to price regulations.
Pfizer’s appeal rests on a number of grounds, including that the CMA has ignored real-world indicators of the economic value of phenytoin sodium, and that Pfizer’s supply price to Flynn was fair in the context of the price of other epilepsy medicines and the drug tariff price for generics.
The appeal further claims that the CMA has erred in its assessment of the value of phenytoin sodium tablets offered to patients and its economic value to the health service, and its investigation into the price of the drug.
Finally, Pfizer argues that it should not be subject to a fine as the CMA’s threshold for intention and/or negligence in the matter has not been met, and also that the penalty itself is disproportionately high “if a fine could lawfully be imposed.”
For its part, Flynn maintains it should not be held responsible for the price charged by Pfizer under their supply agreement, and that the CMA was wrong to rely on absolute rather than percentage profit margins in its assessment.
“The returns earned by Flynn on phenytoin capsules are consistent with the returns earned on comparable drugs under normal conditions in the industry,” it claims, adding that the excesses alleged by the CMA “are not of such an order of magnitude that they justify a finding that Flynn’s prices were abusively high.”
Both companies have asked the Competition Appeal Tribunal (CAT) to set aside the CMA’s decision or alternatively that the fine be waived or substantially reduced. The CAT typically takes around nine months to deliver a verdict, although it can take longer in more complicated cases.
The CMA has been looking into the activities of the two drugmakers for years, finding that they broke competition law in December 2016 and fined them £90 million. That verdict was also referred to the CAT, which found while they had a dominant position in the market, there wasn’t sufficient evidence that the prices being charged were an abuse of that position.
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