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UK’s competition authority fines GSK for pay-for-delay Posted 11/03/2016

The UK’s Competition and Markets Authority (CMA) announced on 12 February 2016 that it had fined GlaxoSmithKline (GSK) GBP 37.6 million for anticompetitive conduct and agreements in relation to the supply of paroxetine.

The case concerns agreements made between 2001 and 2004 in which GSK, the supplier of brand-name antidepressant drug Seroxat (paroxetine), agreed to make payments and other value transfers totalling over GBP 50 million to suppliers of paroxetine generics.

CMA says that these ‘pay-for-delay’ agreements deferred the competition and as a result, the UK’s National Health System (NHS) had to pay higher prices for the drug. It said GSK sales of Seroxat (paroxetine) were GBP 90 million in 2001 alone, but when generics entered the market in 2003, prices dropped by 70% in two years.

The generics companies involved include Generics (UK) (GUK), Alpharma and Norton Healthcare. CMA found that GSK’s agreements with these companies ‘infringed the competition law prohibition on anti-competitive agreements’ and on ‘abuse of a dominant position’.

CMA has therefore imposed fines totalling GBP 44.99 million on the companies directly involved in the infringements. This means that GSK will have to pay a GBP 37.6 million fine, GUK a GBP 5.8 million fine and Alpharma a GBP 1.5 million fine.

Dr Michael Grenfell, CMA’s Executive Director for enforcement said that the 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, however, disagrees with the decision and has said it is considering grounds for appeal. The company has also stated that deals it made with generics makers were to ‘settle costly, complex and uncertain patent disputes’.

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Source: CMA

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