Sunday 25 September 2016

GSK gets massive £37.6m fine for 'market abuse' in delaying generic drugs

Ben Hirschler

Published 14/02/2016 | 02:30

The watchdog first accused GSK of anti-competitive behaviour over Seroxat in April 2013, but it has only now handed out fines.
The watchdog first accused GSK of anti-competitive behaviour over Seroxat in April 2013, but it has only now handed out fines.

Britain's competition watchdog has fined pharmaceutical giant GlaxoSmithKline (GSK) £37.6m (€48.4m) for market abuse in striking deals to delay the launch of cheap generic copies of its former blockbuster antidepressant Seroxat.

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Generic drug companies involved, including Germany's Merck, were also fined smaller amounts, the Competition and Markets Authority (CMA) said, bringing the total penalties to £45m.

GSK said it disagreed with the decision and was considering grounds for appeal.

The CMA move is the latest example of regulators trying to curb "pay-for-delay" deals by drug companies and follows previous actions by US and European antitrust authorities.

The watchdog first accused GSK of anti-competitive behaviour over Seroxat in April 2013, but it has only now handed out fines. "Today's decision sends out a strong message that we will tackle illegal behaviour that is designed to stifle competition at the expense of customers," CMA enforcement head Michael Grenfell said in a statement. The case relates to agreements struck more than a decade ago.

Since then the patents protecting paroxetine, the active ingredient in Seroxat, have expired and the arrangements under investigation have been terminated.

Between 2001 and 2004, the CMA said GSK paid generic drug companies over £50m with the intention of delaying the potential entry of independent competitors, thereby depriving the National Health Service of cheaper supplies.

When independent generic copies eventually arrived at the end of 2003, average paroxetine prices dropped by more than 70pc in two years.

GSK said it struck the deals in order to settle costly, complex and uncertain patent disputes and its action had actually brought down the cost of medicine for the state-run health service by allowing some generic competition.

"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," the company said.

Among the firms involved in the case, the CMA said it had fined Merck £5.8m, as the former parent of Generics UK (GUK), while a £1.5m penalty was imposed for infringements by Alpharma.

Merck, which sold GUK to Mylan in 2007, said it had not been directly involved, adding that it had made adequate provision for the fine, which would have no material impact on its financial results.

©Reuters

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