Antitrust regulators all over the world are tracking pharma's deals with generics makers. Hard on the heels of news that European Commission officials are digging into a potential generics-delaying deal between Johnson & Johnson ($JNJ) and Sandoz, South Korea says it has fined GlaxoSmithKline ($GSK) $2.6 million for an agreement with domestic drugmaker Dong-A Pharmaceutical.
Dong-A didn't get off scot-free, either. The Korean drugmaker was ordered to pay about $1.85 million for its role in the agreement. It's the first time the Korean FTC has applied the country's Fair Trade Act to a generic drug deal, local reports said.
The fine stems from a lawsuit settlement back in 2002. Dong-A had launched its version of Zofran in 1998, and Glaxo immediately sued. According to the South Korean government, Glaxo then offered a deal: exclusive rights to market its anti-nausea drug Zofran and its antiviral drug Valtrex, provided that Dong-A stopped selling the knockoff version of Zofran. Dong-A also had to promise not to sell any product that would compete with Zofran or Valtrex, The Korea Herald reports.
The "reverse payment" deal has delivered up to 16 million won ($14 million) worth of unfair profits to GSK, the Korean FTC says. "GSK has blocked the development and sale of a generic drug even after its patent right for the chemical expired in January 2005," an agency official told the Herald. "Due to their shady deal, the cheapter generic was withdrawn... while financial burden on patients has been deepened."
Glaxo denied the allegations, and officials hinted that the company would appeal. "The deal on the sales of Zofran and Valtex had nothing to do with Dong-A's withdrawal of its generic," a spokesman told the newspaper.