GlaxoSmithKline has been fined £37.6m by Britain’s competition authority for “illegal behaviour” in relation to its antidepressant Seroxat that resulted in higher costs for the NHS.
The Competition & Markets Authority said the pharmaceutical firm had paid generic drugmakers more than £50m between 2001 and 2004 in return for them delaying the launch of cheaper versions of the blockbuster paroxetine drug, branded Seroxat, which sold more than £90m in 2001.
Michael Grenfell, the CMA’s executive director for enforcement, said: “[Friday’s] decision sends out a strong message that we will tackle illegal behaviour that is designed to stifle competition at the expense of customers – in this case, the NHS and, ultimately, taxpayers.”
GSK said it did not accept the CMA’s ruling and argued that its actions had saved the NHS money. The group is considering an appeal.
The generic drugmakers involved, Generics UK Limited (GUK) and Alpharma, were also fined, bringing the total penalties imposed to £45m. GUK’s former parent Merck was fined £5.8m and further penalties of £1.5m were imposed on Alpharma and its parent Actavis.
The CMA said that the “pay-for-delay” agreements “potentially deprived the NHS of the significant price falls that generally result from generic competition”. In this case, when generic copies came on to the market at the end of 2003, average paroxetineprices dropped by more than 70% in two years.
The competition body found that GSK’s agreements with GUK and Alpharma broke the law on anti-competitive deals.
However, GSK said: “GSK and the generics companies entered into these agreements at the time in order to settle costly, complex and uncertain patent disputes. The agreements allowed the generics companies to enter the market early with a paroxetine product and ultimately enabled a saving of over £15m to the NHS.”
GSK initially challenged the generic firms, claiming that their products would infringe its patents on Seroxat, which expired in 2003, and brought litigation proceedings against GUK and Alpharma. But before litigation went to trial GSK struck deals with the firms, thereby avoiding a lengthy court battle.
Grenfell said: “This investigation shows our determination to take enforcement action against illegal anti-competitive practices in sectors big and small. 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.”
Dr Farasat Bokhari, a senior lecturer in the School of Economics at the University of East Anglia, said: “While pay-to-delay deals have been investigated in the US for some time now, the CMA’s decision is the first of its kind in the UK, and is likely to have a sobering effect on pharmaceutical companies that try to extend their monopoly in the UK via such deals. It sends a clear message that these business practices will not go unchecked by the competition authorities.”
Friday 12 February 2016