GSK Punished For Participating In Questionable Business Practices

| by Diana Kruzman
Seroxat, a GSK anti-depressantSeroxat, a GSK anti-depressant

A British pharmaceutical company has been fined for cutting deals with its competitors to prevent them from putting alternative products on the market.

GlaxoSmithKline (GSK), a British pharmaceutical company headquartered in London, and several other firms have been fined by the Competition and Markets Authority (CMA) for being anti-competitive, according to the BBC. The CMA found that between 2002 and 2004, GSK made over $72 million in payments to rival companies that agreed to delay the release of a generic alternative, called paroxetine, to Seroxat, the company’s anti-depressant medication.

As a result of the fines, GSK will have to pay $54,551,662 to the British authority. The companies that accepted the payments, which include Generics UK, Merck, Alpharma, Activis UK, and Xellia Pharmaceuticals, will have to pay $10,734,440.

The CMA also said that GSK’s actions allowed the generic companies to take in profits without increasing competition by bringing small amounts of paroxetine to market instead of GSK. The actions were called “illegal behavior” by Michael Grenfell, a spokesman for the CMA.

"Today's decision sends out a strong message that we will tackle illegal behavior that is designed to stifle competition at the expense of customers — in this case, the NHS and, ultimately, taxpayers,” Grenfell said, according to the BBC.

The CMA has argued that the actions allowed GSK to artificially raise the price of the drug because it effectively did not have any competitors for the time period it was making deals with the generic companies. The agency pointed out that average prices for the drug fell more than 70 percent after paroxetine entered the market properly at the end of 2013.

GSK, however, disagrees with the ruling and is considering appealing the fines. The company argues that it saved the UK’s National Health Service (NHS) money in the long-term and actually brought the drug forward sooner than it would have otherwise.

"GSK and the generics companies entered into these agreements at the time in order to settle costly, complex and uncertain patent disputes," its spokesperson said, according to the BBC. "The agreements allowed the generics companies to enter the market early with a paroxetine product and ultimately enabled a saving of over $21 million to the NHS."

Sources: BBC, Fortune / Photo credit: Jussi Mononen/Flickr

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