Pfizer fined $106M for 2600% price hike on epilepsy drug

A British regulator on Wednesday hit U.S. pharmaceutical giant Pfizer with a record $106 million fine for imposing a 2600% price hike on an anti-epilepsy medication, the latest episode in widening public controversy over prescription drug prices.

New York-based Pfizer broke a competition law by "charging excessive and unfair prices" in the United Kingdom for phenytoin sodiumcapsules in Sept. 2012, after the drug was deliberately de-branded, said the Competition and Markets Authority, Britain's top regulator.

Pfizer (PFE) denied the allegation and said it would appeal the ruling. The company's shares were down 2.1% at $30.89 in morning trading after the announcement.

The regulator said the cost of the anti-epilepsy drug used by an estimated 48,000 U.K. patients to prevent and control medical seizures jumped from $3.57 for 100-milligram packages of the medication to $85.06. The price was ultimately reduced to $68.05 in May 2014, the CMA said.

As a result, Britain's National Health Service annual spending for the drug rose from roughly $2.5 million in 2012 to approximately $63 million the following year, the CMA said.

Epilepsy patients who have already been using phenytoin sodium capsules usually should not switch to alternative medications, so the health service was forced to pay the higher prices, the regulator said.

"Businesses are generally free to set prices as they see fit but those holding a dominant position should not abuse this situation and set prices that are excessive and unfair," Philip Marsden, chairman of the CMA's case decision group for the investigation, said in a statement issued with the announcement.

The regulator also imposed a $6.5 million fine on British drug distributor Flynn Pharma over separate price increases of the anti-epilepsy medication.

Flynn and Pfizer have held a dominant position in their respective U.K. markets for the manufacture and supply of the drug, the CMA said.

The companies were ordered given 30 working days to four months to cut their prices for the drug. The regulator also said the firms would be allowed to charge prices that are profitable but not excessive.

"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," the company said in a formal statement.

The medication was "a loss making product" for the company, the Pfizer said. The fine and ruling "highlights real policy and legal issues concerning the respective roles of both the Department of Health and the CMA, in regulating the price of pharmaceutical products in the U.K.", Pfizer added, saying it will seek clarity on the issues as part of its appeal.

Flynn also said it would appeal, characterizing the CMA ruling as "based on a wholly flawed understanding of the U.K. pharmaceutical market."

The British fines come amid U.S. complaints and investigations of other pharmaceutical companies for similar price hikes on widely used prescription drugs.

Mylan drew criticism this year after the cost of EpiPen, a life-saving anti-allergy injection, rose to about $600 for a two-pack, up from about $100 in 2009. The company agreed to a $465 million settlement with regulators over the way the medication was classified for reimbursement with the Centers for Medicare and Medicaid Services.

Similarly, Turing Pharmaceuticals and Martin Shkreli, the company's former CEO, became subjects of drug pricing investigations following a price hike that raised the cost of a drug that treats dangerous infections in people weakened by AIDS and cancer from $13.50 to $750 per pill.