What the Court of Appeal actually decided

The Court of Appeal found that the Competition Appeal Tribunal (CAT) had made errors in its 2024 decision to set aside the Competition and Markets Authority's finding of excessive pricing against Pfizer and Flynn Pharma.

According to the court's judgment, handed down on 19 June 2025, the CAT "found errors in the Decision which, on a fair reading, the CMA did not make." The court also stated that the CAT "failed to engage with, or mischaracterised, the CMA's decision on critical issues" and rejected the CAT's claims that the CMA had "examined the evidence in a biased and selective way," as reported by City A.M.

The ruling does not immediately reimpose penalties. The court will now consider further submissions from both parties before deciding whether to reinstate the CMA's revised fines: £63.3m against Pfizer and £6.7m against Flynn Pharma.

Juliette Enser, executive director of competition enforcement at the CMA, described the outcome as "an important judgment."

"The judgment confirms the Competition Appeal Tribunal was wrong to set aside the CMA's decision, recognising that our findings were based on a fair and robust assessment of the evidence. We will now make submissions to the Court in advance of its further ruling."

The drug at the centre of the dispute, phenytoin sodium, is used to prevent life-threatening seizures and is relied upon by thousands of patients across the UK, according to the CMA.

How the de-branding strategy inflated NHS costs

The pricing mechanism that triggered the investigation hinged on a structural shift in how phenytoin sodium reached the market.

Prior to September 2012, Pfizer sold the drug under a branded name. As a branded product, its price was subject to the Pharmaceutical Price Regulation Scheme (PPRS), the framework that governed the prices the NHS paid for branded medicines. According to the CMA's findings, the NHS spent approximately £2.3m per year on the drug under this arrangement.

In September 2012, Pfizer sold its UK distribution rights to Flynn Pharma, as reported by City A.M. Flynn Pharma then began selling an unbranded (generic) version of the same capsules, which Pfizer continued to manufacture. Because the product was no longer branded, it fell outside the PPRS price controls.

The commercial consequences were stark. Pfizer sold the drug to Flynn at prices up to 17 times higher than its historic prices, according to the CMA's investigation. Flynn Pharma, in turn, sold the unbranded product to NHS customers at prices up to 27 times higher than those previously charged by Pfizer.

NHS spending on phenytoin sodium soared from roughly £2.3m annually to over £50m in 2013 and over £40m in 2014, according to the CMA's case findings as reported by City A.M.

The CMA characterised the arrangement as exploiting "a loophole by de-branding the drug," leaving the NHS with "no choice" but to pay the new prices, which had been increased "overnight." Phenytoin sodium patients cannot easily switch to alternative treatments; clinical guidance generally requires patients to remain on the same manufacturer's product to avoid the risk of seizures, giving the supplier effective dominance.

A decade of legal ping-pong: the case timeline

The dispute between the CMA and the two pharmaceutical companies has wound through almost every tier of the UK competition enforcement system over more than a decade.

2013: Investigation opens

The CMA (then the Office of Fair Trading, which merged into the CMA in April 2014) opened an investigation into suspected excessive pricing of phenytoin sodium.

2015-2016: First finding and fines

The CMA issued a statement of objections against Pfizer and Flynn Pharma in 2015, alleging abuse of a dominant market position. In 2016, the regulator imposed fines of £84.2m on Pfizer and £5.2m on Flynn Pharma, and ordered both companies to lower their prices.

2018: First CAT overturn

Both companies appealed. In June 2018, the CAT ruled that the CMA had failed to properly evaluate the prices of comparable products and sent the case back to the regulator.

2020: Court of Appeal upholds CAT

The CMA appealed the CAT's 2018 ruling. The Court of Appeal upheld the tribunal's finding that the CMA had not adequately considered the wider market context.

2021-2022: CMA reopens and issues revised fines

In August 2021, the CMA reopened the investigation. In 2022, it issued revised fines: £63.3m for Pfizer and £6.7m for Flynn Pharma, lower than the original penalties but still substantial.

2024: Second CAT overturn

Both companies appealed again. The CAT once more ruled in their favour.

2025: Court of Appeal reverses CAT

The CMA challenged the CAT's 2024 decision. The Court of Appeal heard arguments in January 2025 and delivered its judgment on 19 June 2025, finding that the CAT had been wrong to set aside the CMA's decision. The court will now consider whether to reinstate the fines.

What this means for pharmaceutical suppliers and NHS procurement

The ruling carries practical significance well beyond the two companies named in the case.

Dominant-position pricing under sharper scrutiny

The CMA has pursued several high-profile excessive-pricing cases in the pharmaceutical sector, including enforcement actions against companies such as Advanz Pharma and Auden Mckenzie. The phenytoin sodium case, as the longest-running and most contested of these, serves as a bellwether for how far UK competition law can reach into pharmaceutical pricing decisions.

The Court of Appeal's willingness to reverse the CAT's ruling twice in the same case, first in 2020 on procedural grounds and now in 2025 on substantive ones, signals that the CMA's approach to defining and proving excessive pricing has judicial backing at the appellate level. For any supplier holding a dominant position in essential goods sold to the NHS or other public-sector buyers, the judgment narrows the scope for arguing that high margins alone do not constitute an abuse.

De-branding as a pricing strategy

The case puts a specific commercial tactic under the spotlight. The CMA's characterisation of the Pfizer-Flynn arrangement as a deliberate de-branding strategy to circumvent price regulation is now supported by the Court of Appeal's endorsement of the regulator's factual findings. Pharmaceutical distributors and manufacturers considering similar structural changes to escape regulated pricing frameworks face a clear precedent that such arrangements may attract competition-law scrutiny.

NHS procurement exposure

For NHS procurement teams, the case illustrates the vulnerability created by high switching costs. Phenytoin sodium patients cannot readily change products, which gave Flynn Pharma effective pricing power. Any therapeutic area where clinical continuity requirements lock the NHS into a single supplier presents a similar risk profile. The judgment may strengthen the case for procurement frameworks that build in protections against sudden price escalation following changes in a product's regulatory or branding status.

Post-Brexit enforcement context

Since the UK's departure from the EU, the CMA has operated as the sole competition authority for the UK market, without the parallel jurisdiction of the European Commission. The phenytoin sodium ruling demonstrates the regulator's capacity, and willingness, to pursue complex excessive-pricing cases to their conclusion through the domestic courts. For businesses operating in UK markets where dominance is a factor, the judgment confirms that the CMA's enforcement appetite in this area has not diminished.