UK Charges GSK With Market Abuse

UK Charges GSK With Market Abuse

April 22nd, 2013 // 2:06 pm @

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In the latest instance in which drugmakers have been accused of reaching ’pay to delay’ deals that harm consumers, the UK Office of Fair Trading late last week charged that GlaxoSmithKline colluded with three generic drugmakers to forestall the introduction of low-cost versions of its Seroxat antidepressant, which is known as Paxil in the US.

The agreements included “substantial payments” made by Glaxo to Alpharma, Genericks UK and Norton Healthcare in return for a commitment to delay palns to market generic versions of the antidepressant. In announcing its charges, the anti-trust regulator noted that if drugmakers conspire to delay the potential emergence of generic competition, the UK’s National Health Service may be denied significant cost savings.

‘The introduction of generic medicines can lead to strong competition on price, which can drive savings for the NHS, to the benefit of patients and, ultimately, taxpayers. It is, therefore, particularly important that the OFT fully investigates concerns that independent generic entry may have been delayed in this case,” Ann Pope, Senior Director of Services, Infrastructure and Public Markets at the OFT, said in a statement.

No assumption should be made at this stage that there has been an infringement of competition law. We will carefully consider the parties’ representations to the Statement of Objections before deciding whether competition law has in fact been infringed.” The agreements were actually struck between 2001 and 2004, when the antidepressant was one of Glaxo’s best-selling drugs.

In response, Glaxo maintainted that it “supports fair competition and we very strongly believe that we acted within the law,” and also argued that the deals allowed for other generics to reach the market before its patents expired. The drugmaker added that the deals had already been investigated by the European Commission several years ago and an inquiry was concluded last year with no further action taken (here is the Glaxo statement).

Nonetheless, the OFT scrutiny reflects increased concern over these deals. Over the past few years, the European Commission has filed complaints against several drugmakers for allegedly conspiring to delay the introduction of generics (see here and here). And last month, of course, the US Supreme Court heard arguments about these patent settlements.

The decision could influence the cost of medicines for most Americans because the ruling is expected to determine the pace at which lower-cost generic drugs become available. The pharmaceutical industry and its allies have argued the agreements actually speed lower-cost generics to market. But opponents – a lengthy list that includes the US Federal Trade Commission, AARP, the American Medical Association and 31 states attorney general – argue the deals are harmful antitrust activity that raise consumers costs. The FTC has issued forecasts showing the deals force consumers to pay $3.5 billion a year in higher health care costs (read more about the court review here)  

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