The CMA issued an infringement decision today fining GlaxoSmithKline (“GSK”) and two other pharmaceutical companies a total of £45 million for delaying market entry of generic versions of GSK’s blockbuster anti-depressant Seroxat (paroxetine) in the UK.
The paroxetine patent was due to expire in 2001, and several companies including Generics UK Limited (“GUK”) and Alpharma Limited (“Alpharma”) were considering entering the market with generic versions of paroxetine. After challenging the generic companies with allegations that their products would infringe its patents, GSK concluded agreements with GUK, Alpharma and Norton Healthcare Limited (formerly IVAX). The companies agreed not to enter the UK paroxetine market between 2001 and 2004 in exchange for payments and other value transfers amounting to over £50 million. The CMA found that this kept paroxetine prices high and deprived the National Health Service of the price reduction that would have resulted from earlier entry of generic competition. When the generic paroxetine products finally entered in late 2003, prices dropped by over 70% in only two years.
Alerted by the European Commission in 2010, the CMA initiated an investigation in August 2011, and sent a Statement of Objections to the parties in April 2013. In today’s decision, the CMA concluded that the agreements between GSK and GUK, on the one hand, and GSK and Alpharma, on the other hand, were anticompetitive as they had the object and/or effect to prevent, restrict or distort competition (infringing article 101 of the Treaty of the Functioning of the European Union (“TFEU”) and Chapter I of the Competition Act 1998). In addition, the CMA found that by making payments to GUK, Alpharma and IVAX of more than £50 million to induce them to delay their entry, GSK abused its dominant position (infringing article 102 of the TFEU and Chapter II of the Competition Act 1998). GSK was fined £37.6 million and is considering an appeal. GSK claims that it entered into the agreements with the generic companies in order to settle patent disputes.
This decision is broadly consistent with the European Commission’s recent ‘pay-for-delay’ cases in the pharmaceutical sector, including in the Lundbeck and Servier cases currently pending before the General Court.