Britain Accuses GlaxoSmithKline of Conspiring With Rivals

The Office of Fair Trading alleged that GlaxoSmithKline had abused its dominant position in the market, kept prices artificially high and denied “significant cost savings” to Britain’s state-run health provider, the National Health Service.

The case centers on efforts by three companies, Alpharma, Generics (U.K.) and Norton Healthcare, to market an alternative to Seroxat, GlaxoSmithKline’s brand of paroxetine.

The three were warned by GlaxoSmithKline that their generic equivalents would infringe a patent. To resolve the dispute, each of the rivals concluded one or more agreements with GlaxoSmithKline, the Office of Fair Trading said.

“The O.F.T.’s provisional view is that these agreements included substantial payments from GlaxoSmithKline to the generic companies in return for their commitment to delay their plans to supply paroxetine independently,” the regulator said. The agreements with the three companies collectively spanned the years 2001 to 2004, it said.

GlaxoSmithKline said it believed “very strongly” that it had “acted within the law, as the holder of valid patents for paroxetine, in entering the agreements under investigation.”

“These arrangements resulted in other paroxetine products entering the market before GSK’s patents had expired,” the company said. “We have cooperated fully with the Office of Fair Trading in this investigation.”

The company noted that European Union regulators had reviewed the agreements twice and decided to take no action.

At the time Seroxat was one of GlaxoSmithKline’s best-selling drugs and was used to treat, among other conditions, depression and anxiety disorders, the Office of Fair Trading said.

“The introduction of generic medicines can lead to strong competition on price, which can drive savings for the N.H.S., to the benefit of patients and, ultimately, taxpayers,” said Ann Pope, senior director of services, infrastructure and public markets at the Office of Fair Trading. “It is therefore particularly important that the O.F.T. fully investigates concerns that independent generic entry may have been delayed in this case.”

The action Friday was the first step in formal proceedings: the issuance of a Statement of Objections. The parties involved, which include the three generic companies, can then make written and oral responses.

“No assumption should be made at this stage that there has been an infringement of competition law,” Ms. Pope said. “We will carefully consider the parties’ representations to the Statement of Objections before deciding whether competition law has in fact been infringed.”

If ultimately found to be in breach of antitrust law, a company can in theory be fined up to 10 percent of its worldwide revenue, though financial penalties rarely reach those sorts of levels.

Article source: http://www.nytimes.com/2013/04/20/business/global/britain-accuses-glaxosmithkline-of-conspiring-with-rivals.html?partner=rss&emc=rss