GlaxoSmithKline Fined by UK Watchdog for Pay for Delay Deals
Britain’s watchdog for competition had fined pharmaceutical giant GlaxoSmithKline £37.5 million or $54.4 million due to market abuse. The watchdog said GSK entered into deals that called for the delay of launching inexpensive generic copies of Seroxat its former antidepressant blockbuster.
The generic drug companies that were involved, including Merck based in Germany, were fined as well but in smaller amounts, said the Competition and Markets Authority on Friday, which brought the total in penalties to more than 45 million pounds.
GSK announced that it did not agree with the regulator’s decision and was considering an appeal.
The CMA decision is the most recent example of how regulators are attempting to curb the deal called “pay-for-delay.”
The action follows ones previous by the European and U.S. antitrust authorities. The watchdog accused GSK at first of anti-competitive behavior for Seroxat in April of 2103, but only now has handed the fines out.
The case related to the agreements that were struck over 10 years ago. Over that period, the patents that have protected paroxetine the Seroxat active ingredient have expired and arrangements under this investigation terminated.
From 2001 to 2004, the CMA said the British drug maker paid generic drug business more than £50 million so the companies would delay the possible entry of competitors and therefore depriving the country’s National Health Service of less expensive supplies.
When the independent generics eventually arrived in the market near the end of 2003, the average price for paroxetine fell by over 70% in a period of two years.
GSK announced that it had entered into deals to settle costly, uncertain and complex patent disputes and the action had actually lowered the cost of medicines for the government run health service as it allowed some competition from generics.
Amongst the companies with generic drugs involved in this case, the CMA said it fined Merck £5.8 million, as the former parent of Generics UK and a penalty of £1.5 million against Alpharma.