US drug giant Pfizer has been fined a record sum by the UK’s competition watchdog, after it increased prices to “extraordinary” levels.
The Competition and Markets Authority handed Pfizer a £84.2 million fine for its role in the price increase, which saw NHS spending on the drug rise from £2 million a year in 2012 to about £50 million in 2013.
The 2,600 percent increase occurred after Pfizer sold the rights to privately-owned British company, Flynn. The product was then debranded, meaning it was no longer subject to price regulation and sending the price soaring.
Philip Marsden, chairman of the CMA’s case decision group, said on Wednesday:
“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.”
He added, “This is the highest fine the CMA has imposed and it sends out a clear message to the sector that we are determined to crack down on such behaviour and to protect customers.”
The CMA also fined Flynn Pharma £5.2 million for their role in the price increase.
Pfizer disputed the CMA’s decision in a statement, saying that it planned to appeal all aspects of the verdict.
“Pfizer refutes the findings set out in the Competition and Markets Authority decision. In this transaction, and in all of our business operations, we approached this divestment with integrity, and believe it fully complies with established competition law.
“Phenytoin capsules were a loss making product for Pfizer and the Flynn transaction represented an opportunity to secure ongoing supply of an important medicine for patients with epilepsy, while maintaining continuity of manufacture.”
Pfizer (NYSE:PFE) shares are currently down 0.09 percent ahead of the market open in New York, at 31.56 (0928GMT).