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Another Look at the Economics of the UK CMA’s Phenytoin Case

In: Excessive Pricing and Competition Law Enforcement

Author

Listed:
  • John Davies

    (Compass Lexecon)

  • Jorge Padilla

    (Compass Lexecon)

Abstract

Davies and Padilla examine the UK Competition and Markets Authority’s 2016 decision to penalise Pfizer and Flynn Pharma for excessive pricing of phenytoin, an off-patent anti-epilepsy drug. The authors describe the CMA’s assessment of the gap between prices and cost and note that this same evidence is used in assessment of each of market definition, dominance and abuse. The CMA properly considered other evidence too, but this could serve as a precedent for a fragile and unreliable approach to assessing excessive pricing. The CMA found the price excessive ‘in itself’, rather than placing weight on comparator prices: a more appropriate measure of value. The authority imposed a fine uplifted by 400% for ‘deterrence’, and the authors question how realistic such deterrence objectives are, for excessive pricing provisions.

Suggested Citation

  • John Davies & Jorge Padilla, 2018. "Another Look at the Economics of the UK CMA’s Phenytoin Case," International Law and Economics, in: Yannis Katsoulacos & Frédéric Jenny (ed.), Excessive Pricing and Competition Law Enforcement, pages 71-97, Springer.
    • Handle: RePEc:spr:intchp:978-3-319-92831-9_3
    DOI: 10.1007/978-3-319-92831-9_3
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