The CMA has issued a statement of objections to these two firms alleging that they have breached the UK and EU competition law.
The drug, which is indicated to treat epilepsy in order to prevent and control seizures, is used by more than 50,000 people in the UK.
Phenytoin sodium capsules are manufactured by Pfizer and they are later distributed to UK wholesalers and pharmacies by Flynn under a distribution agreement signed in 2012 between the two firms.
The CMA’s statement of objections concerns both the prices that Pfizer has charged to Flynn and the prices that Flynn Pharma has charged to its customers, since September 2012.
Before September 2012, Pfizer manufactured and sold phenytoin sodium capsules in the UK under the brand name Epanutin.
According to CMA, Pfizer sold phenytoin sodium capsules at between eight and 17 times its historic prices to Flynn, which then sold the drug at between 25 to 27 times more than the prices previously charged by Pfizer.
When Pfizer manufactured phenytoin sodium capsules under its Epanutin brand name, the NHS spent about £2.3m on the drug and this amount increased to £50m in 2013 and more than £40m in 2014.
CMA Antitrust Enforcement senior director Ann Pope said: "While businesses are generally free to set prices as they see fit, those that hold a dominant position have a special responsibility to ensure that their conduct does not impair genuine competition and that their prices are not excessive and unfair.
"The prices that the CMA is concerned about in this case are very high compared to those prices previously charged and have led to a big increase in the total NHS drug bill for what is a very important drug for tens of thousands of patients.
"The CMA’s findings on dominance and abuse are provisional and no conclusion can be drawn at this stage that there has, in fact, been any breach of competition law. We will carefully consider any representations from Pfizer and Flynn Pharma before deciding whether the law has been infringed."
The CMA said that its findings are only provisional and does not necessarily lead to an infringement decision.
If Pfizer and Flynn are found to have breached the law, the CMA has the power to impose a financial penalty of up to 10% of their global annual revenue.
Image: Pfizer and Flynn Pharma accused of overcharging anti-epilepsy drug. Photo: courtesy of UK Government.