Antitrust Law Daily Wrap Up, ANTITRUST NEWS: UK competition authority fines pharmaceutical companies £45 million for ‘pay-for-delay’ agreements, (Feb 16, 2016)

By Michael Menzhuber, J.D., LL.M.

A number of pharmaceutical companies have been fined by the U.K. Competition and Markets Authority (CMA) for anti-competitive conduct and agreements in relation to the supply of paroxetine, the CMA announced on February 12.

The CMA’s decision to fine the companies relates to agreements between 2001 and 2004 in which GlaxoSmithKline pic (GSK), the supplier of Seroxat, a branded paroxetine, agreed to make payments and value transfers totaling more than £50 million to suppliers of generic versions of paroxetine.

After Generics (UK) Limited (GUK) and Alpharma Limited (Alpharma) took steps to enter the UK market for paroxetine with a generic version, GSK commenced litigation against them. Before the matter went to trial, GUK and Alpharma each entered into an agreement with GSK that prohibited their entry in the UK paroxetine market.

The CMA found that these agreements infringed the competition law prohibition on anticompetitive agreements. It also found that GSK’s conduct in making payments to GUK, Alpharma and another company, Norton Healthcare Limited, to induce them to delay their efforts to enter the UK paroxetine market independently of GSK, infringed the competition law prohibition on abuse of a dominant position.

The CMA imposed fines of £37,606.275 of GSK and £5,841,286 on Merck KGaA (GUK’s former parent) and GUK. It also imposed fines totaling £1,542,860 on Activus UK Limited, Xellia Parmaceuticals ApS, and Alpharma LLC.

Norton Healthcare Limited and its parent at the time, IVAX LLC, were subject to the CMA’s investigation but were not fined after it was determined that they had not infringed competition law.

The pharmaceutical companies’ “pay-for-delay” agreements deferred the competition that the threat of independent generic entry could offer and potentially deprived the National Health Service of the significant price falls that generally result from generic competition. In this case, when independent generic entry eventually took place in 2003, average paroxetine prices dropped by 70 percent in two years.

News: Antitrust