US pharmaceutical major Pfizer has been fined a record £84.2 million by the UK’s competition authority for overcharging the National Health Service (NHS) for an anti-epilepsy drug. The Competition and Markets Authority (CMA) has also fined distributor Flynn Pharma £5.2 million for hiking the price by 2,600% overnight after the drug was deliberately debranded in 2012. NHS spending on the phenytoin sodium capsules, which are used by 48,000 patients in the UK, rose from £2 million in 2012 to around £50 million in 2013. Prices in the UK were also many times higher than Pfizer was charging in other European countries, the CMA said.

“The companies deliberately exploited the opportunity offered by debranding 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,” said Philip Marsden, chairman of the Case Decision Group for the CMA’s investigation. However, epilepsy patients who are already taking phenytoin sodium capsules should not usually be switched to other products due to the risk of losing seizure control, which can have serious health consequences, the CMA said, explaining why the NHS had no alternative to paying the higher prices.

Before September 2012, Pfizer made and sold the capsules under the name Epanutin and prices were regulated. The US group then sold the UK distribution rights to Flynn Pharma, which then sold it as a generic unbranded product, allowing it to hike the price as it was no longer subject to regulation. Pfizer has rejected the findings of the CMA’s three-year investigation and said it will appeal the decision.  It said the phenytoin capsules were a lossmaking 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”.  The drugs giant said the increased price of the drug was still 25% to 40% below the cost of an equivalent medicine by another supplier to the NHS.

The CMA said its calculations showed that Pfizer would have recovered its previous losses within two months of raising prices and accused the companies of abusing their dominant market positions. “There is no justification for such rises when phenytoin sodium capsules are a very old drug for which there has been no recent innovation or significant investment,” Marsden commented.

Flynn Pharma is also appealing the CMA’s findings, saying the decision is based on a “wholly flawed understanding of the UK pharmaceutical market.” David Fakes, CEO of Flynn Pharma, said: “We believe that 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.”

The CMA has also demanded that both firms reduce their prices:  Pfizer must comply within 30 days, and Flynn has four months.