The U.K.'s Competition and Markets Authority was only formed in 2014, but it didn't mind reaching back more than a decade for evidence to slap GlaxoSmithKline ($GSK) with a $54.4 million (£37.6 million) fine. In its first pay-for-delay decision, it said the U.K. company thwarted generic competition to its antidepressant drug Seroxat by paying off a handful of generic players.GlaxoSmithKline's corporate headquarters in Brentford, London--Courtesy of GlaxoSmithKline
The authority ruled that between 2001 and 2004, GSK struck deals with generics makers, paying more than £50 million to get them to hold off launching their copycats in the U.K. As a result, for years the National Health System had to pay higher prices for the drug. It said GSK sales of Seroxat (paroxetine) were £90 million in 2001 alone but when the knockoffs finally hit at the end of 2003, prices came in a 70% less than branded Seroxat.
"These 'pay-for-delay' agreements deferred the competition that the threat of independent generic entry could offer, and potentially deprived the National Health Service of the significant price falls that generally result from generic competition," the authority said in its announcement today.
Like other companies that have been cited for similar deals in the U.S. and Europe, GSK disagreed that it did anything wrong, that the agreements just allowed it to settle costly, and uncertain, litigation. In an email to Bloomberg, the company said: "The agreements allowed the generics companies to enter the market early with a paroxetine product and ultimately enabled a saving of over £15 million" to the health service.
Regulators on both sides of the Atlantic have had some success pursuing these cases. In 2013, the European competition watchdog fined Johnson & Johnson ($JNJ) and Novartis ($NVS) about $22 million for keeping a generic version of fentanyl, a powerful pain reliever used by cancer patients, off the market. The Federal Trade Commission in the U.S. has pursued a number of cases aggressively. One case ended up at the Supreme Court which put some restraints on the government in pursuing its actions.
The U.K. authority today said it has also fined Generics UK, now part of Mylan ($MYL), and its former parent Merck KGaA, £5.8 million. It fined Actavis, £1.5 million, as the successor to Alpharma.
In a comment to Bloomberg, Merck KGaA said it has already set aside money to cover the fine. "This is the first case in relation to this type of patent-settlement agreement in the U.K.," the Darmstadt, Germany-based company said. "Merck was not a contract party to the agreement between" Mylan and Glaxo and was held jointly liable as the former owner of Generics (U.K.) Ltd, now Mylan.
- here's the announcement
- get more from Bloomberg