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CMA fines pharmaceutical companies £45 million
12 February 2016 • Author: Victoria White
The UK Competition and Markets Authority (CMA) has fined a number of pharmaceutical companies for anti-competitive conduct and agreements in relation to the supply of paroxetine.
The CMA’s decision relates to conduct and agreements between 2001 and 2004 in which GSK, the supplier of branded paroxetine, agreed to make payments and other value transfers totalling over £50 million to suppliers of generic versions of paroxetine. The CMA has found that these payments and other value transfers were aimed at delaying the potential entry of generic competitors into the UK market for paroxetine.
In 2001, a number of pharmaceutical companies – including Generics (UK) Limited (GUK) and Alpharma Limited (Alpharma) – were taking steps to enter the UK market for paroxetine with a generic version. GSK’s own branded version of paroxetine, Seroxat, was a ‘blockbuster’ product: In the UK, 4.2 million prescriptions were issued for Seroxat in 2000 and Seroxat sales exceeded £90 million in 2001. At the time GSK held certain patents in relation to paroxetine.
GSK challenged these pharmaceutical companies, alleging that their generic products would infringe its patents, and commenced litigation proceedings against GUK and Alpharma. Before that litigation went to trial, GUK and Alpharma each entered into agreements with GSK, which included terms prohibiting their independent entry into the UK paroxetine market.
The CMA found that 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.
Agreements infringed competition law
The CMA found that GSK’s agreements with each of GUK and Alpharma infringed the competition law prohibition on anti-competitive agreements. The CMA has also found that GSK’s conduct, in making payments to GUK, Alpharma and one further company, Norton Healthcare Limited (IVAX) infringed the competition law prohibition on abuse of a dominant position.
The CMA has imposed fines totalling £44.99 million on the companies directly involved in the infringements.
Commenting on the announcement, Michael Grenfell, the CMA’s Executive Director for Enforcement, said: “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.”
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