Upcoming AWS Coverage on Rockwell Medical Post-Earnings Results

LONDON, UK / ACCESSWIRE / December 8, 2016 / Active Wall St. blog coverage looks at the headline from Pfizer Inc. (NYSE: PFE). US lawmakers and politicians have waged a war against drug companies over high prices. In Britain, a similar move was observed, when on December 07, 2016, UK's antitrust regulator, Competition, and Markets Authority (CMA) slapped out a record $107 million fine against Pfizer. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

One of Pfizer's competitors within the Drug Manufacturers - Major space, Rockwell Medical, Inc. (NASDAQ: RMTI), reported on November 07, 2016, its results for the third quarter of 2016. AWS will be initiating a research report on Rockwell Medical in the coming days.

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The charges stated that Pfizer overcharged the national health-care system for an epilepsy treatment. As per initial reports expenses for the national health-care system for epilepsy treatments amounted to £2 million in 2012, but after the price hike, it had to shell out £50 million in 2013.

The phenytoin sodium shots

Phenytoin is an antiepileptic drug, primarily used to prevent and control seizures. Also known as an anticonvulsant, this drug is used to reduce the spread of seizure activity in the brain. It is also used to treat certain forms of irregular heartbeats.

Pfizer sold the drug to UK wholesalers and pharmacies initially, under the brand name, 'Epanutin'. However, the drug was deliberately de-branded in September 2012, according to the accusation made by the CMA. Pfizer sold the UK distribution rights to Flynn Pharma in September 2012, which de-branded (or genericized) the drug, and was thus out of the price regulation rules. Flynn and Pfizer, according to CMA, utilized the loophole in UK's drug price regulation rules where drug manufacturers are free to set the prices for generic solutions.

The accusation

On August 07, 2015, the first accusation took to headlines when CMA alleged that the US drug maker, Pfizer, along with Flynn Pharma, deliberately charged excessive and unfair prices for phenytoin sodium capsules. The CMA stated that the prices rose from £2.83 to £67.50 after the rights were sold to Flynn. The prices were reduced marginally in May 2014, to £54.

Ann Pope, the CMA's senior director of antitrust enforcement, said the prices were "very high compared to those previously charged" and had led to a big increase in the drug bill for the UK National Health Service. In a response to the accusation, a spokeswoman from Pfizer stated that before the deal with Flynn, it had incurred losses while selling Epanutin in the UK. The discontinuation of the drug, she said would have cost higher to the NHS.
"Ensuring a sustainable supply of our products to UK patients is of paramount importance to Pfizer and was at the heart of our decision to divest the product," Pfizer's spokesperson stated.

The CMA's Ruling

Since 2012, Pfizer supplied its product, phenytoin sodium capsules to Flynn Pharma, at prices between 780% and 1600% higher than the previous prices for Epanutin. Flynn further raised the prices by 2300% to 2600% from the initial price before supplying them to wholesalers and distributors. The CMA, in its latest findings, stated that both the entities, which held a dominant position in their respective segments for manufacturing and supplying the drug, raised the prices deliberately owing to monopolistic competition.

Philip Marsden, the Chairman of the Case Decision Group released a three-point note for the CMA's investigation. Summarizing it, he stated, that the companies deliberately exploited the opportunity offered by de-branding to hike the prices for the drug which is used by more than 50,000 patients in the UK alone. He put light on the fact that phenytoin sodium capsules are a very old drug and there had been no recent innovation or significant investment, thus, the price raise was not justified.

A spokesperson from Pfizer claimed that it was incurring loss prior to de-branding. However, according to CMA's calculations, any such loss would have been easily recovered within 2 months of the price hike.

Stock Performance

On Wednesday December 07, 2016, Pfizer's shares fell 1.17% from the previous closing price of $31.56, finishing the day at $31.19. A total volume of 44.02 million shares were exchanged for the day, which was higher than the average volume of 24.54 million over 3 months. For the last month, the stock has gained 3.69%. Furthermore, on a year to date basis, the stock gained 0.28%. The company's shares are trading at a PE ratio of 31.13 and have a dividend yield of 3.85%.

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SOURCE: Active Wall Street