GSK faces £2.6 billion fine
pharmafile | April 19, 2013 | News story | Sales and Marketing | GSK, Seroxat, paroxetine
GlaxoSmithKline could be fined £2.6 billion after the Office of Fair Trading (OFT) alleged it paid generics firms to slow up the supply of the antidepressant paroxetine in the UK, thus negating competition on price.
Seroxat, whose active ingredient is paroxetine, was one of GSK’s top sellers in 2001-04, which is when the OFT suggests that the company gave the manufacturers money to delay their entry to the market.
The OFT has issued a Statement of Objections, the formal vehicle suggesting that a company may have fallen foul of the Competition Act 1998 and European competition law – infringements which carry a maximum fine of up to 10% of worldwide turnover.
GSK, which posted revenues of £26.4 billion last year, said in a statement: “As we have just received the Statement of Objections, we will need time to carefully review it before considering any further action.”
The OFT says Alpharma, Generics (UK) and Norton Healthcare were each attempting to supply a generic paroxetine product in competition to Seroxat – but in each case GSK alleged their products would infringe GSK’s patents.
“To resolve these disputes, each of the generic companies concluded one or more agreements with GSK,” the OFT says.
“The OFT’s provisional view is that these agreements included substantial payments from GSK to the generic companies in return for their commitment to delay their plans to supply paroxetine independently,” it goes on.
GSK’s conduct therefore amounted to an abuse of a dominant market position, the OFT alleges and may have denied the NHS ‘significant cost savings’.
The manufacturer retorts that “we very strongly believe that we acted within the law”, and adds that it has ‘co-operated fully’ with the OFT and says this is ground which has already been covered by the European Commission in 2005-06.
“In March 2012 the Commission announced that it had formally concluded its enquiry with no further action,” GSK went on. “The issues were also reviewed in the European Commission’s 2008-2009 Sector Inquiry. Neither investigation resulted in any sanctions against the company.”
Despite the seriousness of the allegation, the OFT is adopting a cautious tone.
“No assumption should be made at this stage that there has been an infringement of competition law,” explained Ann Pope, OFT senior director of services, infrastructure and public markets.
“We will carefully consider the parties’ representations to the Statement of Objections before deciding whether competition law has in fact been infringed,” she added.
Article 101 of the Treaty on the Functioning of the European Union (TFEU) covers agreements or practices which may affect trade between EU member states, while the Competition Act prohibits the abuse of a dominant position that may affect trade in the UK.
Adam Hill
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