U.K. goes after GSK for decade-old pay-for-delay deal

Pay-for-delay deals are disliked by regulators on both sides of the Atlantic. A month after the U.S. Supreme Court heard arguments on the practices, regulators in the U.K. have turned to a decade-old deal, no longer in place, to accuse GlaxoSmithKline ($GSK) of paying competitors to keep generics off the market. 

In this case the drug is Seroxat--Paxil in the U.S.--and the agreement dates to 2001 through 2004, Reuters reports. The accusation come from U.K.'s Office of Fair Trade (OFT) and accuses the U.K. drugmaker of making "substantial payments" to Alpharma Ltd., Generics and a unit of Teva Pharmaceutical Industries ($TEVA) to keep their versions of the antidepressant off the market. Glaxo says it did nothing wrong and points out that European Commission regulators have already gone over the old deal and decided not to act on it. If the U.K. does press on, GSK could be fined up to 10% of its £26.4 billion sales in 2012. 

European regulators have looked askance at the practice for years and have probed deals that included the whole range of Big Pharma: AstraZeneca ($AZN), Nycomed, Sanofi ($SNY), Novartis ($NVS), Bayer and Roche ($RHHBY). Ultimately they have brought few cases, but some analysts think the investigations themselves have had a chilling effect on the deal-making. 

Not in the U.S. The OFT's counterpart in the U.S. has been pounding on drugmakers for years, suing over particular settlements and waving red flags about the costs of delayed generic entry. The Federal Trade Commission in January reported that there are more of the deals than ever before, and therefore are costing Americans and the U.S. government an increasing amount of money. It said in fiscal 2012 drugmakers reached 40 settlements on patent disputes, "significantly higher" than the 28 the year before. It said there were agreements for 31 different brand-name pharmaceutical products with combined annual U.S. sales of more than $8.3 billion. 

That fight finally made its way to the Supreme Court, in the form of FTC v. Actavis, a suit questioning Actavis and Solvay Pharmaceuticals' AndroGel patent settlement. The Supreme Court heard the case last month, but justices seemed to be of a mixed mind on the matter (as they often are). The government argued that if a drugmaker pays a generics challenger to refrain from launching a copy until an agreed-upon date, then it's a stalling tactic. Drugmakers say cash patent settlements should be legal as long as the generic versions made their debut before the patent's actual expiration date. But Justice Antonin Scalia said it should be the actual strength of the patent in question, not its nominal expiration date, that decides whether the generics hit the market. And Justice Anthony Kennedy suggested that generic companies shouldn't be able to collect more from a branded drugmaker in a patent settlement than they could expect to earn if they actually launched their generic product.

- here's the Reuters story
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