Antitrust Law Daily Wrap Up, ANTITRUST NEWS: U.K. Competition Authority Issues Objections to Pharmaceutical “Pay for Delay” Agreements, (Apr 19, 2013)

By Tobias J. Gillett, J.D., LL.M.

The United Kingdom Office of Fair Trading (OFT), the U.K.’s competition authority, today issued a statement of objections to certain pharmaceutical companies alleging that they entered into unlawful "pay-for-delay" agreements to postpone effective competition in the U.K. market for paroxetine, a prominent antidepressant medication, the OFT has announced.

In its statement of objections, the OFT alleged that GlaxoSmithKline (GSK) entered into agreements with each of the generic drug manufacturers Alpharma Limited, Generics (UK) Limited, and Norton Healthcare Limited, under which GSK made substantial payments to the generic manufacturers in exchange for the manufacturers’ commitments to delay introduction of their generic paroxetine products. The OFT asserts that GSK’s conduct amounted to an abuse of its dominant position in the market.

According to the OFT, GSK challenged each of the generic manufacturers’ attempts to supply a generic paroxetine alternative to its Seroxat product through lawsuits asserting that the manufacturers would thereby infringe GSK’s patents. The manufacturers allegedly entered into the agreements to resolve the litigation or anticipated litigation. The OFT claimed that the delay of generic competition could deny significant cost savings to the U.K.’s National Health Service (NHS).

"The introduction of generic medicines can lead to strong competition on price, which can drive savings for the NHS, to the benefit of patients and, ultimately, taxpayers," said Ann Pope, the OFT’s Senior Director of Services, Infrastructure, and Public Markets. "It is therefore particularly important that the OFT fully investigates concerns that independent generic entry may have been delayed in this case."

However, Pope emphasized that "[n]o assumption should be made at this stage that there has been an infringement of competition law." A statement of objections gives notice of a proposed infringement decision under the Competition Act 1998 and/or the Treaty on the Functioning of the European Union. The OFT will assess the representations of the parties in response to the statement of objections before concluding whether they committed any violations of U.K. competition law.

GlaxoSmithKline response. GSK has issued a press release contending that its actions complied with U.K. law.

"GSK supports fair competition and we very strongly believe that we acted within the law, as the holder of valid patents for paroxetine, in entering the agreements under investigation," the press release states. "These arrangements resulted in other paroxetine products entering the market before GSK’s patents had expired."

Companies: Actavis UK Limited; Alpharma Limited; GlaxoSmithKline UK Limited; Generics (UK) Limited; Norton Healthcare Limited; IVAX LLC; Beecham Group plc; Merck KGaA

News: Antitrust