09 December 2016

In the US, They Get Lectured to, in the UK, They Get Fined

Pfiser and its distributor, Flynn Pharma, raised the price of an epilepsy drug by 2600%.

The UK authorities £84.2 million and £5.2 million respectively:
In September 2012, the amount the National Health Service (NHS) was charged for 100mg packs of anti-epilepsy drug phenytoin sodium went from £2.83 to £67.50 ($3.56 to $84.98), according to the UK's Competition and Markets Authority (CMA). As a result of the price increase, NHS expenditure on the drug increased from about £2 million ($2.52M) a year in 2012 to around £50 million ($62.95M) in 2013.

The CMA has ordered the two companies involved, the US pharma giant Pfizer and UK-based distributor Flynn Pharma, to pay record fines of £84.2 million ($106.01M) and £5.2 million ($6.55M) respectively, and to reduce their prices for phenytoin sodium. Both have said that they will be taking legal action to overturn the decision.

Before September 2012, Pfizer sold the drug in capsule form to UK wholesalers and pharmacies under the brand name Epanutin, and the prices of the drug were regulated. That month, Pfizer sold the UK distribution rights for Epanutin to Flynn Pharma, which "de-branded" the drug. A spokesperson for the CMA explained in an e-mail to Ars what this meant in practice:
Prior to de-branding, Pfizer's prices were governed by the Pharmaceutical Price Regulation Scheme (PPRS) which prevented any large prices increases. The PPRS applies only to branded products. After Flynn purchased the UK distribution rights from Pfizer, it de-branded the products. As de-branded (or genericised) products, the PPRS price controls did not apply, which allowed Flynn to charge whatever prices it wanted. De-branding did not have the consequence of increasing prices; rather it removed the PPRS restriction on Flynn increasing the prices.

Normally, we would expect competition to lead to the price of a generic product to fall. However, the characteristics of this drug—i.e. the constraints on switching patients to other drugs—mean that did not occur.
In response to the complaints of the pharm pig-felchers, CMA replied:
In response to this, the CMA spokesperson told Ars: "the fact that other companies may have been charging high prices does not entitle Pfizer and Flynn to charge excessive and unfair prices."
This is an attitude that is unthinkable in the United States.

If Bernie Sanders, and Elizabeth Warren, and Keith Ellison, and their fellow travelers can make people think in terms of unfair and excessive prices, the battle is already half won.

The neoliberal "Washington consensus", which seems to be composed of equal parts Ayn Rand and hypocrisy, needs to be overthrown.


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