Pharma companies fined £45m for anti-competitive conduct
GlaxoSmithKline (GSK), Generics UK (GUK) and Alpharma have been fined £45m by the Competition and Markets Authority (CMA) for anti-competitive conduct and agreements
The CMA said GSK, the supplier of branded paroxetine (an anti-depressant medicine), agreed to make payments and other value transfers totalling over £50m, between 2001-4, to suppliers of generic versions of paroxetine – including GUK and Alpharma.
These payments and other value transfers were aimed at delaying the potential entry of generic competitors into the UK market for paroxetine, according to CMA.
GSK’s own branded version of paroxetine, Seroxat, was a ‘blockbuster’ product and at the time GSK held certain patents in relation to paroxetine.
GSK challenged pharmaceutical companies taking steps to enter generic paroxetine into the market, alleging that their generic products would infringe its patents and commenced litigation proceedings against GUK and Alpharma.
Before that litigation went to trial, GUK and Alpharma each entered into agreements with GSK, which included terms prohibiting their independent entry into the UK paroxetine market.
According to the CMA, these ‘pay-for-delay’ agreements deferred the competition that the threat of independent generic entry could offer and potentially deprived the NHS of the significant price falls that generally result from generic competition.
The CMA said it has found that GSK’s agreements with each of GUK and Alpharma infringed the competition law prohibition on anti-competitive agreements and infringed the competition law prohibition on abuse of a dominant position.
The CMA has imposed fines totalling £44.99 million on the companies directly involved in the infringements and, where relevant, on their parent companies or successors to these companies:
- GSK’s total fine is £37,606,275
- GUK’s total fine is £5,841,286 and has been imposed on Merck KGaA (GUK’s former parent) and GUK
- Alpharma’s total fine is £1,542,860 and has been imposed on Actavis UK Xellia Pharmaceuticals and Alpharma LLC
The Guardian reported that GSK said it did not accept the CMA’s ruling and that the group is considering an appeal.
GSK said to the newspaper: “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.”
Michael Grenfell, the CMA’s executive director for enforcement, said: “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 - in this case the NHS and ultimately, taxpayers.
“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.”