GlaxoSmithKline is being accused of undertaking unfair ‘pay-for-delay’ delays with several generics firms in the UK over the sale of copycat forms of its drug Seroxat.

The allegations have come from the UK’s Office of Fair Trading (OFT) which believes GSK had agreements which “infringed competition law” with three generics companies: Alpharma, Generics (UK) and Norton Healthcare, by paying them to stop the supply of generic Seroxat (paroxetine) in the UK.

More damningly, the OFT also alleges GSK’s conduct amounted to an “abuse of a dominant position in the same market” by undertaking these deals between 2001 and 2004.

The generics firms had been selling copycat paroxetine, but GSK challenged the generic companies’ with allegations that their products would infringe its patents.

To help resolve these patent disputes, each of the three generic companies eventually signed a financial agreement with GSK, stopping the distribution of the generics – a deal potentially unlawful in the UK.

Seroxat (known as Paxil in the USA) was one of GSK’s biggest selling medicines before losing its European patent in 2006 and US patent in 2007, and has licenses to treat depression and anxiety.

The OFT said in a statement that its provisional view is that these agreements included “substantial payments” from GSK to the generic companies in return for their commitment to delay their plans to supply paroxetine independently.

The OFT considers that if companies act to delay the potential emergence of generic competition, the NHS may be denied significant cost savings.

These types of pay-for-delay deals have been illegal in the UK since 1998 and breaching these rules could be a big deal for the firms involved as they could be fined up to 10% of their worldwide turnover.

Ann Pope, senior director of services, infrastructure and public markets at the OFT, said: “The introduction of generic medicines can lead to strong competition on price, which can drive savings for the NHS, to the benefit of patients and, ultimately, taxpayers. It is therefore particularly important that the OFT fully investigates concerns that independent generic entry may have been delayed in this case.

“No assumption should be made at this stage that there has been an infringement of competition law. We will carefully consider the parties’ representations to the Statement of Objections before deciding whether competition law has in fact been infringed.”

GSK were not immediately available for comment.

Another potential knock to GSK’s reputation

If the charges against GSK are successful, this may do some damage to the firm’s carefully built reputation under the recently knighted Sir Andrew Witty, the man also hailed by the British Medical Journal last month as: ‘the acceptable face of pharma’.

Pay-for-delay deals have been a big problem in some countries – especially the USA - where pharma firms developing branded drugs make payments (or other transfers of value) to a generic company in return for that firm to delay its entry into the market.

This means the generic firms are compensated for delaying the sale of their drugs, and firms with blockbuster medicines can keep artificially bringing in the revenue from their branded medicine, even after the patent has expired.

But as the OFT points out, only pharma wins here, to the detriment of healthcare systems who could be spending millions more on a patented drug when a generic is legally available.

More Seroxat trouble

And this is not the first time Seroxat has landed GSK in trouble: just last year the firm was fined $3 billion after pleading guilty to healthcare fraud covers offences relating to some of GSK’s best-selling drugs between 1997 and 2004.

This included the firm paying doctors in the USA to prescribe the drug to under-18s, even though it had no licence for this, and there were in fact clinical trials suggesting using this drug in children could increase the risk of suicide and depression.