UK: Investigation Leading To CMA's Largest Fine Being Imposed On Pfizer Leads UK Government To Legislate To Allow Them To Intervene In The Market For Pharmaceuticals, Medical Devices And Medical Services

Last Updated: 21 December 2016
Article by Alison Dennis

On 7 December 2016 the Competition and Markets Authority (UK regulator for anti-trust) ("CMA") published its decision to impose a fine of nearly £90M on Pfizer and its distributor, Flynn Pharma in relation to huge price inflation in the UK market.

From the publicly available information, the facts of this case are fairly stark:  In September 2012 Pfizer's product, phenytoin sodium capsules to prevent and control seizures, were de-branded (from Epanutin).  This took the product out of the PPRS, which imposes limits on profit margins for companies which are members of the ABPI or who have separately sign-up to participate in the PPRS for branded products.  This meant that pricing for this product should theoretically have been subject to the effects of generic competition.  However, for this particular product (used to treat around 48,000 patients in the UK), patient switching is apparently considered not to be possible because such a switch can affect the control of seizures and consequently to be seriously detrimental to health.

Following the change from branded to un-branded name, the price charged by Pfizer to its distributor, Flynn Pharma, rose by between 780% and 1,600%.  The prices charged by Flynn Pharma to UK wholesalers and pharmacies rose by between 2,300% and 2,600%.

The CMA found that both Pfizer and Flynn Pharma had a dominant position and that they abused that dominant position by charging excessive and unfair prices.  The CMA imposed its highest fine ever, and the fine on Flynn Pharma amounted to 10% of its worldwide turnover.  The CMA also ordered the companies to reduce their prices to ones which are not excessive and unfair within between 30 working days and four months of the decision.

Pfizer have said that they are appealing "all aspects of the decision".  We don't have the benefit of seeing Pfizer's arguments that their activities did not breach competition law.  In any appeal they will have to succeed in arguing either they did not have a dominant position, or that if they did have a dominant position, that they did not abuse it.  Pfizer have said that they were previously making the drug at a loss.  That must have been a pretty substantial loss if in order to achieve a margin that was neither excessive or unfair it was necessary to increase prices by the eye-watering proportions in this case.   The CMA have calculated from figures provided by Pfizer that the losses sustained at previous prices would have been recovered within two months of the new pricing.

The price rises in this case of themselves indicate the potential presence of a dominant position and would not generally be expected to be found in a normally operating and genuinely competitive market.  It will therefore be particularly interesting to see Pfizer's explanation for these very substantial price rises when this goes to appeal. 

The government's reaction to this investigation, which was opened in May 2013, is to put through the legislative process the Health Service Medical Supplies Bill ("the Bill").  That Bill is currently on its way through the House of Lords, having progressed at speed through all readings in the House of Commons.  It is therefore highly likely to make it onto the statute book.  That Bill and its associated regulations essentially amend the provisions of the National Health Service Act 2006 and amongst other things provide the government with more extensive powers to demand information about pricing, revenue and profits and to allow the government to implement a claw-back of monies from manufacturers of products sold under the statutory scheme.

The government had previously trusted that the PPRS would control profits for branded medicinal products and that competition in the market for generics would control prices for products under the statutory scheme.  Following the investigation, the faith of the government in the operation of the free market to act as a break on excessive pricing under the statutory scheme has been broken.  Once the Bill and the related secondary regulation are on the statute book, should any case with similar facts arise, the government is likely to use its broader powers to more quickly investigate significant price rises and to order a repayment of profits rather than to wait more than three years as in this case, for the CMA to reach a decision.  It is unfortunate, although perhaps not surprising, that the lack of trust which has arisen as a result of this case has meant that the government has also strengthened similar provisions for the medical device industry and the industry for the provision of health services, even though market forces are likely not to operate in exactly the same way for those industries.  It is a case of the whole class being punished for the misdemeanours of one or two students.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions