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GlaxoSmithKline faces inquiry over 'price fixing'

Fine could be as high as £2.6bn if competition rules were broken
  • @greentoby

The pharmaceuticals giant GlaxoSmithKline was yesterday accused of entering into agreements with rivals that may have prevented the NHS from being able to buy cheaper versions of one of its top-selling drugs.

The Office of Fair Trading alleged GSK abused its dominant market position, making payments to other companies that resulted in the delay of generic versions of the anti-depressant drug paroxetine, sold in the UK under the brand name Seroxat.

Because generic drugs are much cheaper than branded ones, the OFT claimed this meant the NHS may have been “denied significant cost savings”.

In a “statement of objections”, the watchdog alleged GSK struck deals with Alpharma, Generics and Norton Healthcare that “included substantial payments … in return for their commitment to delay their plans to supply paroxetine independently.”

Ann Pope, a senior director at the OFT, said: “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. It is therefore particularly important that the OFT fully investigates concerns that independent generic entry may have been delayed in this case.”

But she added: “No assumption can be made at this stage that there has been an infringement of competition law.”

The agreements being investigated were in place between 2001 and 2004. GSK denied the allegations, saying it “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.

“These arrangements resulted in other paroxetine products entering the market before GSK’s patents had expired.”

If GSK is found to have broken competition law, the company could be fined as much as 10 per cent of its worldwide turnover, which last year was £26.4bn.

Worldwide sales of Seroxat were £374m in 2012 – a 14 per cent drop on 2011 mainly due to “generic competition” according to GSK.