Pharmaceutical giant GlaxoSmithKline (GSK) is getting a £37 million fine from the Competition and Markets Authority (CMA) over “illegal behaviour that is designed to stifle competition at the expense of customers — in this case, the NHS and, ultimately, taxpayers.”
The fine relates to a so-called “pay-for-delay” deals GSK reached with two generic drug makers between 2001 and 2004 to stop cheaper, non-branded versions of one of its “blockbuster” drugs being introduced to the market.
The CMA says in a statement on Friday that GSK “agreed to make payments and other value transfers totalling over £50 million to suppliers of generic versions of paroxetine,” an anti-depressant drug that GSK made £90 million from in the UK in 2001 alone.
GSK reached out of court settlements with the two companies hoping to introduce generic versions of the drug, delaying the launch of cheaper alternatives until late 2003. The CMA has also fined the two companies that settled with GSK £1.5 million and £5.8 million, taking the total fines to £45 million.
The CMA says:
These ‘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. 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.
Michael Grenfell, the CMA’s Executive Director for Enforcement, says:
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.
This is not the first time GSK has been in trouble over its branded version of paroxetine, Seroxat. Last September a medical journal criticised the company for delaying access to key data from a trial of its antidepressant Seroxat that would have shown earlier that it is neither safe or effective in adolescents.
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