Big Pharma charging and the NHS – What’s the Cost?
Pharmaceutical company Pfizer, and UK company Flynn Pharma are accused of charging “excessive and unfair prices” for an anti-epilepsy drug, phenytoin sodium capsules.
Of course, it’s not only the anticonvulsants such as phenytoin that’s way overpriced. Many other drugs, particularly ED tablets, are overpriced to obscene levels. But let’s first take a look at the underlying problem.
The danger of drug monopolies
Britain’s competition watchdog – the Competition and Markets Authority (CMA) – conducted an investigation into the sale of this medicine in the UK. It concluded that both companies are abusing their market position. In a press release they stated:
“Pfizer and Flynn Pharma each abused a dominant position by charging excessive and unfair prices in the U.K.”
As such, the companies may well have breached both UK and EU competition laws.
A Senior Director of the CMA Antitrust Enforcement, Ann Pope, said that dominant firms in any market must keep their prices “just and fair” and not attempt to inhibit competition for their products.
“Businesses are generally free to set prices as they see fit. However, those that hold a dominant position have a special responsibility to ensure that their conduct does not impair genuine competition. They must ensure that their prices are not excessive and unfair.”
“The prices that the CMA showed concern about in this case are very high compared to those prices previously charged. This leads to big increases in the total NHS drug bill. And it is a very important drug for tens of thousands of patients.”
This isn’t an obscure drug that only by a few people need. Not that that would make the price hikes any less immoral. It is a medicine – phenytoin sodium capsules. Up to 50,000 people in the UK need to control epileptic seizures. By inflating the price of this medicine, the National Health Service has had to spend 22 times more on the drug in the last 3 years. Yes, you read that right.
How this scam works
So how did Pfizer and Flynn Pharma succeed in inflating the price of the drug so much?
Basically, Pfizer makes the phenytoin sodium capsules and sells them to Flynn Pharma. Flynn Pharma, based in Hertfordshire, is the “middleman” who then sells them onto pharmacies and wholesalers in the UK.
The CMA alleges that both the prices Pfizer has been charging Flynn Pharma, and the prices Flynn Pharma have then been charging UK pharmacies are unjustly high.
Now, Pfizer used to sell this medicine directly to UK wholesalers under a different brand name – Epanutin. However, it then sold its rights to distribute it in the UK to Flynn Pharma in 2012. Flynn Pharma then renamed the drug Phenytoin Sodium, and began to sell that version.
And this is when the price hikes began. Firstly Pfizer started selling the drug to Flynn Pharma at a much higher price than they had previously sold it to UK wholesalers (remember, it’s the same capsules, just a different name) – in fact, CMA reckon, at 17 times the previous price.
But of course, now Flynn Pharma holds the exclusive right to sell the drug to the UK pharmacies. After Flynn Pharma adds their own price hike, UK wholesalers sell the drug at 27 times the former Pfizer price.
By how much are pharmaceutical giants fleecing the NHS?
So, since Pfizer sold on the distribution rights of the drug to Flynn Pharma, UK wholesalers and pharmacies have been paying 27 times the previous price.
So how does that figure in for the NHS, since it has to buy the drug for its patients?
Well, prior to 2012, the NHS spent about £2.3 million (US$3.56 million) on phenytoin sodium capsules per year. Afterwards, in 2013 the NHS spent £50 million on the same drug, £40 million in 2014.
As such, the CMA argues that the NHS bill for the drug is wildly excessive. And it’s hard to argue with those figures.
And all this at a time when the NHS is having its worst ever funding crisis, as Tory-led austerity starts to bite.
This isn’t the first time that a pharmaceutical company has been accused of excessively high pricing. NAPP was fined for price-hiking when selling a morphine-type drug to doctors.
However, many other companies have also been accused of unfair pricing by health authorities over the years. The problem is that it’s tricky to actually prosecute companies for it because it’s hard to gather sufficient evidence against them.
Are pharmaceutical giants breaking the law?
The CMA is slightly cagey on whether Pfizer and Flynn Pharma have actually breached the law, since its current findings are only provisional, although it is requiring both companies to submit evidence promptly so this can be clearly investigated.
If the companies are found guilty of violating competition law, by abusing their positions of dominance within the market, they would be penalised with fines of up to ten percent of their yearly global turnover.
So what do the companies say? Pfizer claims to be “co-operating fully” with the investigation, adding that selling its distribution rights for the anti-epilepsy drug was to ensure “a sustainable supply” of their drugs to UK patients.
Flynn Pharma insists it will also “cooperate fully” with the investigation but will “vigorously defend itself against the allegations.”
So, I guess, we shall see. In the meantime, is the price of Phenytoin Sodium capsules going down? Nope!
The move towards generic medications
You can purchase the exact same drug for a fraction of the cost of the branded versions. Pharmaceutical conglomerates such as Pfizer and others control these brand-name drugs.
No where is this more true than in the field of erectile dysfunction treatments. Sales of generic Viagra and generic Cialis outnumber purchases of the branded versions many time. Clearly understandable when the difference between by generic Viagra for under £1 per tablet or a brand Viagra for £8 to £12 per tablets.
The same applies to many other medications such as antiviral Zovirax tablets to anticonvulsant medication such as Topamax.
There is a big shift going on in accordance to consumer demand. People want to purchase medications that are closer to the actual costs of drug manufacture.
In practical terms this means a shift from brand name drugs to generic medications. When you consider that generic drugs contain the exact same properties as brand name equivalents, it is easy to see why this shift in shopping habits is taking place.
No longer are treatments such as erectile dysfunction medications an option for there well off. Generic ED tablets allow life-transforming breakthroughs in medical science for the enjoyment of all.