PFE Pfizer Inc

By Denise Roland 

LONDON-- Pfizer Inc. has been fined GBP84.2 million ($106.7 million) by the U.K.'s competition regulator for charging the country's National Health Service excessively high prices for an anti-epilepsy drug.

The Competition and Markets Authority said Wednesday that Pfizer and drug distribution company Flynn Pharma broke competition law by charging unfair prices in the U.K. for phenytoin sodium capsules, an anti-epilepsy drug used by around 48,000 patients in the country.

The regulator fined Flynn Pharma GBP5.2 million ($6.6 million) and has ordered both companies to reduce their prices.

A spokeswoman for Pfizer said the company refuted the CMA's findings and would appeal all aspects of the decision. Flynn Pharma couldn't immediately be reached for comment.

The CMA said the price of a 100mg pack of phenytoin sodium shot up--to GBP67.50 from GBP2.83--after Pfizer sold the rights to sell the drug to Flynn Pharma in September 2012. It said the price decreased to GBP54 in May 2014. Before the agreement, Pfizer had sold phenytoin sodium capsules directly to U.K. wholesalers and pharmacies under the brand name Epanutin.

The price increase was partly because Pfizer, which continued to manufacture phenytoin sodium, sold the drug to Flynn Pharma at up to 17 times the price than it charged wholesalers and pharmacies previously, the regulator said. Flynn Pharma hiked the price further still.

The regulator said Pfizer and Flynn Pharma "deliberately debranded" the drug in 2012 to raise its price. In the U.K., the price of branded drugs is determined by negotiations between the government and pharmaceutical companies. But unbranded, or generic drugs, may be freely priced. Typically, generic drugs cost a fraction of the branded version because there tend to be several competing suppliers, but in this case, no other company made phenytoin sodium.

A spokeswoman for Pfizer said the company "approached this divestment with integrity and believes it fully complies with established competition law."

She said phenytoin capsules were loss-making for Pfizer before the deal with Flynn Pharma and the transaction secured ongoing supply of the medicine. The spokeswoman added that the price charged by Flynn Pharma was 25-40% lower than that for an equivalent, branded epilepsy medicine whose price was regulated.

Philip Marsden, the chairman of the case decision group for the CMA investigation, said the companies "deliberately exploited the opportunity offered by de-branding to hike up the price of a drug which is relied upon by many thousands of patients."

Although Pfizer said the drug was loss-making before de-branding, the losses would have been recovered within two months of the price rises, Mr. Marsden said.

"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," he said.

Write to Denise Roland at Denise.Roland@wsj.com

(END) Dow Jones Newswires

December 07, 2016 05:02 ET (10:02 GMT)

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