GlaxoSmithKline and a number of other pharmaceutical companies have been fined £45 million by the UK’s Competition and Markets Authority for anti-competitive conduct relating to the supply of the antidepressant Seroxat (paroxetine).
The fines relate to so called ‘pay-to-delay’ deals between 2001 and 2004, worth more than £50 million, that the CMA says were put in place by GSK to stave off generic competition to its blockbuster drug and thus protect sales.
In 2001, a number of companies - such as Generics (UK) and Alpharma - were moving to launch cheaper copycat versions of Seroxat in the UK market but were challenged by GSK, which alleged patent infringement in legal proceedings.
However, before the case went to trial, both GUK and Alpharma signed deals with GSK that included terms preventing their independent launch into the UK paroxetine market, according to the CMA.
“These ‘pay-for-delay’ agreements deferred the competition that the threat of independent generic entry could offer, and potentially deprived the National Health Service of the significant price falls that generally result from generic competition,” it argues, concluding that GSK’s agreements with GUK and Alpharma infringed competition law prohibition on anti-competitive agreements, and that the drug giant had abused its dominant position.
GSK was fined £37.6 million, total fines of £5.8 million have been imposed on Generics UK and its former parent Merck KGaA, and in respect of Alpharma’s infringement, total fines of £1.5 million have been imposed on Actavis UK, Xellia Pharmaceuticals and Alpharma.
“This investigation shows our determination to take enforcement action against illegal anti-competitive practices in sectors big and small,” said Michael Grenfell, the CMA’s Executive Director for Enforcement. “Cracking down on these practices is essential to protect consumers, to encourage legitimate business activity that such practices stifle, and to stimulate innovation and growth”.
However, GSK says it doesn’t agree with the ruling, and is considering grounds for an appeal.
“GSK and the generics companies entered into these agreements at the time in order to settle costly, complex and uncertain patent disputes,” the firm said in a statement. “The agreements allowed the generics companies to enter the market early with a paroxetine product and ultimately enabled a saving of over £15 million to the NHS.”