CMA fines GlaxoSmithKline £38m for generics delay scam

The UK competition watchdog has fined GlaxoSmithKline for making illegal payments to rivals that delayed the launch of potentially cheaper generic medicine, potentially costing the NHS many millions.

GSK has been fined £37.6m by the Competition and Markets Authority, with Merck fined £5.8m and Actavis £1.5m.

The CMA said its investigation found that GSK had paid around £50m between 2001 and 2004 to Generics UK (GUK), which was then a part of Merck, and Actavis in order to halt their entry into the UK market for anti-depressant medicine paroxetine.

GUK and Actavis, then called Alpharma, were poised to launch generic competition to GSK's branded blockbuster version of paroxetine, Seroxat, which at the time generated revenues of more than £90m.

GSK made the payments as it also battled the two companies in the courts, alleging that these generic versions would infringe its patents.

"These ‘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," the CMA said.

When generic versions of paroxetine eventually were launched in 2003, average paroxetine prices dropped by over 70% in two years.

Michael Grenfell, the CMA’s executive director for enforcement, said: "Today’s decision sends out a strong message that we will tackle illegal behaviour that is designed to stifle competition at the expense of customers - in this case, the NHS and, ultimately, taxpayers.

"This investigation shows our determination to take enforcement action against illegal anti-competitive practices in sectors big and small. Cracking down on these practices is essential to protect consumers, to encourage legitimate business activity that such practices stifle, and to stimulate innovation and growth."