GlaxoSmithKline 'paid off' rivals to delay drug release, alleges OFT

The Office of Fair Trading has accused drugs giant GlaxoSmithKline (GSK) of market 'abuse'.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013

Here’s a bitter pill for GSK to swallow this morning. The OFT has released a ‘Statement of Objections’ alleging that the pharmaceutical giant paid rivals to delay the release a treatment for depression, paroxetine.

Paroxetine, (an SSRI in the same family as the world-renowned Prozac), labelled Seroxat by GSK, is also distributed (albeit tweaked and under different names) by Alpharma, Generics UK and Norton Healthcare. According to the OFT, all of these companies received money not to enter the market with their versions.

GSK has refuted the allegations, saying that the companies were in fact infringing its patent. The cash exchanged hands to resolve the dispute out of court, it alleges. ‘The paroxetine supply agreements under investigation were terminated in 2004,’ a statement from GSK said, adding that ‘these arrangements actually resulted in generic versions of paroxetine  entering the market before GSK's patents had expired.’

GSK also argues that this issue is in fact old news; the OFT is covering ground that has already been investigated by the European Commission in 2005-2006 and again in the 2008-2009 Sector Enquiry, it says. ‘In March 2012 the Commission announced that it had formally concluded its enquiry with no further action,’ reads the company statement. 'We strongly believe that that we acted within the law.'

If the OFT’s allegations are upheld, this could prove very tricky for GSK. It would mean that all parties involved have infringed competition law and that GSK has abused its dominant place in the market. A problem that could only be solved by forcing the company to sell off certain patents or divisions. A bit like what’s happened in the airline industry with landing slots – only with drugs.

‘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,’ says Ann Pope, senior director of services, infrastructure and public markets at the OFT. ‘It is therefore particularly important that the OFT fully investigates concerns that independent generic entry may have been delayed in this case.’

Basically, Pope is saying that if price-fixing if rife, the taxpayer is paying over the odds for medicine and the UK government is at the mercy of a drugs cabal.

All the implicated firms will now be asked to respond to the OFT’s allegations, before the OFT makes a decision on whether or not competition law has been infringed.

No doubt GSK wishes there was a pill that could make this world of reputational pain go away…

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