19 April 2013Patents

OFT accuses GSK of market abuse over pay-for-delay deals

The UK Office of Fair Trading (OFT) has accused pharmaceutical firm GlaxoSmithKline (GSK) of abusing its market dominance and infringing UK competition law by paying rivals to delay releasing generic versions of its anti-depressant Seroxat.

In a statement of objections published on Friday, April 19, the OFT alleges that GSK made “substantial payments” to Alpharma Limited, Generics Limited and Norton Healthcare Limited between 2001 and 2004.

The deals were made after GSK accused the companies of patent infringement for attempting to sell their generics before its patent for the drug expired. The patent was revoked by the European Patent Office in 2005, following a challenge from Dutch manufacturer Synthon.

In a statement commenting on the OFT’s investigations, GSK said: “we strongly believe we acted within the law”.

“The paroxetine supply agreements under investigation were terminated in 2004. The OFT investigation covers matters that have already been investigated by the European Commission, [which] formally concluded its inquiry with no further action,” it added.

But if the OFT finds otherwise, GSK faces a maximum fine of 10 percent of its global revenues.

GSK, Norton, Alpharma and Generics have until May 17 to respond to the OFT’s objections.

If the OFT finds GSK liable, Marc Israel, partner at Macfarlanes LLP who is advising a generic Gaviscon manufacturer in an unrelated claim for damages against Reckitt Benckiser, said it “would send a very strong message about pay-for-delay deals.”

“There can be legitimate reasons for payments between innovators and generics—for example, if a generic has developed some IP and an innovator would like to buy it—but companies would have to consider the reasons for entering into a deal very carefully,” he added.

Israel also said that while the OFT could fine GSK up to 10 percent of its worldwide turnover, the real figure, if it is found liable, is likely to be much lower and would be based on its Seroxat revenues. “Reckitt Benckiser was found to have abused its market position in 2010, and was fined just over £10 million,” he said.

Becket McGrath, partner at Edwards Wildman Palmer LLP, agreed that any fine imposed would likely be much less, but added: “The key question here is why the [European] Commission closed its case [against GSK] last year.

“The Commission clearly has on-going concerns over pay for delay arrangements, and is investigating other companies for such conduct, so why did it ultimately decide that it should not pursue its case against GSK?  As GSK has also pointed out, the agreements under investigation terminated in 2004, which does beg the question of why the OFT is continuing with this case after so long,” he said.

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Adrian Tapping at atapping@newtonmedia.co.uk


More on this story

Patents
20 June 2013   The European Commission’s competition directorate has levied fines totalling €146 million ($195 million) against originator pharmaceutical company Lundbeck and several producers of generics drugs.