GSK fined for anti-competitive behaviour

Pharmaceutical giant, GlaxoSmithKline (GSK), has been fined £37.6m by the UK’s Competition and Markets Authority (CMA)for making illegal payments to companies to delay their rival medicines entering the British market. Smaller fines were also imposed on the other pharmaceutical companies it paid.

The CMA’s investigation found that GSK, the supplier of anti-depressant paroxetine it sold under the Seroxat brand, agreed to make payments and other value transfers totalling over £50m to suppliers of generic versions of the medicine between 2001 and 2004. GSK was challenging a number of pharmaceutical companies in 2001 alleging that their generic products would infringe its patents, and commenced litigation proceedings against GUK and Alpharma. However, 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.

The ‘pay-for-delay’ agreements deferred the competition that the threat of independent generic entry could offer, and potentially deprived the National Health Service of the significant price falls that generally result from generic competition, the CMA said. In this case, when independent generic entry eventually took place at the end of 2003, average paroxetine prices dropped by over 70% in 2 years the regulator found.

Michael Grenfell, the CMA’s Executive Director for Enforcement, 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.”

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