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UK watchdog accuses GSK over ‘pay-to-delay’ drug deals

British antitrust authorities accused the pharmaceuticals giant GlaxoSmithKline on Friday of paying three rivals to delay the introduction of a generic version

Written by New York Times | London | Published: April 20, 2013 1:58:23 am

STEPHEN CASTLE

British antitrust authorities accused the pharmaceuticals giant GlaxoSmithKline on Friday of paying three rivals to delay the introduction of a generic version of an antidepressant drug.

It is the latest in a series of similar cases that are drawing scrutiny from regulators on both sides of the Atlantic.

Britain’s Office of Fair Trading alleged that GlaxoSmithKline had abused its dominant position in the market,kept prices artificially high and denied “significant cost savings” to Britain’s state-run health provider,the National Health Service.

The British case centers on efforts by three companies,Alpharma,Generics (UK) and Norton Healthcare,to market an alternative to Seroxat,GlaxoSmithKline’s brand of paroxetine. (The company sells it in the US under the brand name Paxil.)

In recent years regulators in Europe and the US have paid greater attention to so-called “pay to delay” deals,suspecting that they may allow big companies to make big profits by exploiting a brief but lucrative period of monopoly over the supply of a product.

“These are blockbuster drugs,” said Farasat Bokhari,senior lecturer at the University of East Anglia,“so if they are on the market without generics challenging them then companies can maintain high,monopoly,profits.” “As soon as generic entry takes place,” Bokhari added,“prices drop significantly,sometimes by up to 70 to 80 per cent.”

GlaxoSmithKline,according to British authorities,warned the three companies that their generic equivalents would infringe a patent. To resolve the dispute,each of the rivals concluded one or more agreements with GlaxoSmithKline,the Office of Fair Trading said.

“The OFT’s provisional view is that these agreements included substantial payments from GlaxoSmithKline to the generic companies in return for their commitment to delay their plans to supply paroxetine independently,” the regulator said.

The agreements with the three companies collectively spanned the years 2001 to 2004,it said.

GlaxoSmithKline said it believed “very strongly” that it had “acted within the law,as the holder of valid patents for paroxetine,in entering the agreements under investigation.” “These arrangements resulted in other paroxetine products entering the market before GSK’s patents had expired,” the company said. “We have cooperated fully with the Office of Fair Trading in this investigation.”

If ultimately found to be in breach of antitrust law,a company can in theory be fined up to 10 per cent of its worldwide revenue,though financial penalties rarely reach those sorts of levels.

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