Britain's competition watchdog has accused pharmaceutical companies Pfizer and Flynn Pharma of breaching U.K. and European law by ramping up the cost of an epilepsy drug, given to more than 50,000 British patients, by as much as 2,600 percent.
The Competition and Markets Authority (CMA) said its provisional view was that Pfizer and Flynn Pharma each abused a dominant position by charging "excessive and unfair" prices for phenytoin sodium capsules.
The U.S.-based Pfizer manufactures the drug and U.K.-based Flynn distributes it. While Pfizer used to market the medicine itself under the brand name Epanutin, it sold the rights to Flynn in September 2012, and since then the price has surged. Pfizer said the drug had been loss-making and it was therefore forced to consider whether it could continue supplying it at all.
The CMA said Pfizer sold the drug at between 8 and 17 times its historic price to Flynn, which then turned around and sold it to customers at between 25 to 27 times more than the prices previously charged by Pfizer.
"While businesses are generally free to set prices as they see fit, those that hold a dominant position have a special responsibility to ensure that their conduct does not impair genuine competition and that their prices are not excessive and unfair," Ann Pope, the CMA's senior director of antitrust enforcement, said in a statement.
As a result, the state-run National Health Service (NHS), which used to spend around $3.6 million on phenytoin sodium capsules annually, saw its bill jump to more than $77.5 million in 2013 and more than $62 million in 2014.
"The prices that the CMA is concerned about in this case are very high compared to those prices previously charged and have led to a big increase in the total NHS drug bill for what is a very important drug for tens of thousands of patients," Pope said.
CMA — which can fine companies up to 10 percent of annual worldwide sales if they are found to have breached competition law — said its findings were at this point "provisional" and that it would hear from both companies before deciding if there had been a "breach of competition law."
Pfizer and Flynn said they were cooperating fully with the CMA and noted a final decision on any infringement of the law had not yet been made.
David Fakes, a director at Flynn, based in Stevenage near London, told Reuters his company would defend itself vigorously against the allegations, adding its product was priced competitively against rivals, including a tablet version of phenytoin.
Pfizer, for its part, had already been in the crosshairs of U.K. politicians during its controversial bid to buy British rival AstraZeneca last year in what would have been the biggest-ever foreign takeover of a British business. Critics of the deal expressed fears that a takeover could mean job cuts and potential loss of stature in the country's science sector.
Al Jazeera and wire services