The original CMA investigation found that Pfizer and Flynn’s illegal behaviour led to NHS annual costs for phenytoin capsules rising from £2 million in 2012 to around £50 million in 2013
The Competition Appeal Tribunal (CAT) has imposed a total fine of £69m on pharmaceutical manufacturers Pfizer and Flynn Pharma for “charging excessive prices” for the life-saving epilepsy drug, phenytoin sodium capsules, between 2012 and 2016.
The tribunal ruled that both companies had intentionally abused their dominant positions in the market and were “gouging the market in a manner that can only be characterised as unjustifiable or opportunistic or – in a word – unfair.”
The fine imposed by the CAT is almost identical to the levels set earlier by the Competition and Markets Authority (CMA).
Following a remittal from the CAT, the CMA reassessed its case and in 2022 imposed fines of approximately £70 million on Pfizer and Flynn, totaling £63.3 million and £6.7 million respectively, for breaching competition law.
In a statement, the CMA said that while it “agrees with the CAT’s conclusion that the firms’ pricing behaviour was abusive under competition law, and that significant fines are appropriate in this case,” it disagrees with the tribunal’s findings and reasoning regarding its decision.
The CMA added that it is “carefully considering whether to appeal the judgment.”
Overview of the case
The original CMA investigation in 2016 found that Pfizer and its distributor Flynn had increased the price for phenytoin capsules by 2,300–2,600%, causing annual NHS costs to rise from £2m in 2012 to around £50 million in 2013.
Both companies challenged this decision at the CAT, which upheld the CMA’s findings on market definition and dominance but set aside the conclusion that the companies’ prices were “an unlawful abuse of dominance.”
The case was then referred back to the CMA for further consideration in a process known as remittal.
Both the CMA and Flynn appealed to the Court of Appeal, which in March 2020 dismissed Flynn’s appeal and upheld aspects of the CMA’s appeal regarding unfair pricing. The CMA reopened its investigation in June 2020 and issued a remittal decision in July 2022.
Pfizer and Flynn appealed the remittal decision, and the CAT heard the case in November and December 2023. The tribunal’s judgment in November 2024 marks the outcome of that appeal.
In its statement, the CMA noted that the CAT had “agreed with most of the drug firms’ grounds of appeal, finding against the CMA in a number of matters, including in relation to the approach to calculating a ‘reasonable rate of return’, its assessment of unfairness, and the overall procedure followed.”
However, the CAT concluded that the firms had infringed the Chapter II prohibition of the Competition Act 1998 in 7 out of the 8 infringements originally found by the CMA.
Based on those infringement findings, the CAT imposed the same level of fines as the CMA, but for a 1% reduction of Pfizer’s fine.
The tribunal concluded that Pfizer’s prices for the 25mg Capsules did not infringe the Chapter II prohibition.
As a result, a fine of £62,370,000 was imposed on Pfizer, and a fine of £6,704,422 on Flynn.
