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12 Feb 2016

UK competition authorities fine GSK $54.5 million for adopting pay-for-delay strategy

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Britain’s competition authority has fined drugmaker GlaxoSmithKline plc 37.6 million pounds ($54.5 million) for stalling the potential entry of generic competitors of an anti-depressant drug Seroxat into the marketplace.

Generic drug companies involved, including Germany’s Merck KGaA, were also fined smaller amounts, the Competition and Markets Authority (CMA) said on Friday, bringing the total penalties to 45 million pounds.

The fine levelled Friday is the largest since the Competition and Markets Authority’s inception in 2014.

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

The authority fined the pharmaceutical company for making payments and other transfers of more than 50 million pounds to generic suppliers of the drug, also known as paroxetine. The authority says that GSK first sued generic drugmakers Generics (UK) Limited and Alpharma Limited, but later settled, paying for them to delay their entry into the market.

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 50 million pounds with the intention of delaying the potential entry of independent competitors, thereby depriving the National Health Service (NHS) of cheaper supplies.

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

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

The issue of brand-name pharmaceutical companies paying makers of generic drugs to drop patent challenges was at the centre of a European review of the sector in 2008-2009, which did not result in any action against GSK.

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