Appeal court asks CMA to re-review evidence in phenytoin pricing case

Court of Appeal has ordered the Competition and Markets Authority (CMA) to re-review the evidence in an excessive pricing case against Pfizer.

The ruling given yesterday (March 10) relates to the CMA’s 2016 decision, which found Pfizer and Flynn Pharma in breach of competition law by charging unfairly high prices for anti-epilepsy drug phenytoin sodium capsules.

The CMA investigation followed a substantial increase in the price of the drug in September 2012 and the watchdog imposed fines totalling nearly £90 million on both firms: £84.2 million on manufacturer Pfizer, and £5.2 million fine on distributor Flynn Pharma.

Both firms challenged the decision at the Competition Appeal Tribunal (CAT) and the latest judgement follows an appeal by CMA against the appellate tribunal's decision in June 2018.

The CAT has provisionally decided to remit the case back to the CMA for further consideration, after ruling against its finding of abuse.

The Court of Appeal ruled that the CMA need to evaluate the economic models put forward by the companies as part of their response, even if the regulator “had, in its judgment, conducted a sufficient analysis.”

The appeal court, however, said the CMA is within its rights on deciding how to test a price is excessive or not. The court held that the tribunal was wrong to require the CMA to go beyond a cost plus calculation in order to determine whether the prices by Pfizer and Flynn were excessive.

Welcoming the judgement , the CMA said it will carefully review the elements referred back by the court.

"Today’s judgment is a good result. The CMA was right to appeal the CAT’s judgment. We will now get on with the elements of the case against Pfizer and Flynn Pharma that the court has decided to refer back to us," commented Andrea Coscelli, CMA chief executive.