On Wednesday, the U.K.’s top antitrust regulator fined Pfizer, Inc. (NYSE:PFE) $107 million for overcharging as much as 2600% on an epilepsy treatment. The Competition and Markets Authority (CMA) alleged that Pfizer and Flynn Pharma Ltd., a drug distribution firm, charged unfair prices on U.K. for phenytoin sodium, a drug used by around 48,000 patients nationwide.
The CMA fined Pfizer £84.2 million ($107 million), which was the highest fine CMA has imposed, and also fined Flynn Pharma £5.2 million. The British regulator also commanded the two companies to reduce prices.
“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 behavior.” said Philip Marsden, the chairman of the CMA’s case decision group.
The prices increased after de-branding of the medicine, which means that it was not controlled by the regulation. Pfizer used to market the drug under the name of Epanutin, and in September 2012, Pfizer sold the rights to Flynn.The spokeswoman for Pfizer said the firm “approached this divestment with integrity and believes it fully complies with established competition law.”
However, Philip said that “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.”
In respond to the announcement, spokesperson for both companies said they they turned down the findings of CMA, and they would appeal all aspects of its decision. Pfizer said that the price of Flynn was 25 to 40% less than the cost of equivalent tablet form from other producers, and the drug was loss-making and they are considering whether to continue producing it. Shares of Pfizer dropped on Wednesday after the announcement.