[ 2013-07-11 ]

‘Pay for delay’ drug deals cast black cloud over GSK
The price of a blockbuster medicine for depression
was kept artificially high for years by
GlaxoSmithKline at a cost of tens of millions of
pounds to taxpayers, the Office of Fair Trading
alleged yesterday.

Britain’s biggest healthcare company could face
a legal claim from the Government to claw back a
portion of the £321 million paid by the NHS for
Seroxat, a widely used neurological drug, between
2000 and 2004.

In the latest in a series of damaging brushes with
regulators on both sides of the Atlantic, GSK
stands accused of striking covert “pay for
delay” deals with smaller drugs manufacturers to
deter them from launching copycat versions of
Seroxat.

The OFT described these agreements as “an abuse
of a dominant market position”.

Ann Pope, an OFT director, 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.”

Seroxat was one of the most lucrative drugs in
GSK’s history. The group’s global sales of the
drug peaked at £2.06 billion in 2002, of which
£375 million came from Europe. In the four years
up to 2004, the NHS dispensed 13.6 million
prescriptions of the drug, which is used for a
range of conditions including depressive disorders
and anxiety.

In a strong hint that it might take civil action
against the company, the Department for Health
said: “We await the findings of the OFT
investigation with interest and we will consider
any appropriate action.”

Jeremy Hunt, the Health Secretary, is in the
middle of negotiations with the drugs industry
over a cut in the annual bill paid by the NHS for
drugs and he is likely to use GSK’s alleged
market abuse as leverage.

GSK insists it has done nothing wrong. The company
said: “We very strongly believe we acted within
the law, as the holder of valid patents for [the
drug], in entering the agreements under
investigation.”

The deals were struck under the leadership of
Jean-Pierre Garnier, GSK’s former chief
executive. They were with three manufacturers of
high-volume generic drugs: Alpharma, Generics UK
and Norton Healthcare. Under the arrangements, GSK
agreed to supply the trio with large volumes of
Seroxat, which were packaged and sold under a
generic name, for an agreed price. In return, the
three companies agreed not to try to undercut GSK
further by formulating their own copycat drugs.

Farasat Bokhari, a health economist at the
University of East Anglia, said that similar
behind-the-scenes arrangements were common in the
drugs industry: in 2010 and 2011, there were 13
similar settlements involving a payment to
generics manufacturers to delay competition.

“It’s the first such case in the UK and in
that sense, it’s a test case,” Dr Bokhari
said.

GSK has had a bruising year at the hands of
prosecutors. In July, it paid a record $3 billion
to settle accusations in the United States of
mis-marketing several drugs, including Seroxat,
which was wrongly promoted for use among
children.

The OFT has been investigating GSK since it was
handed information in 2010 by an undisclosed
plaintiff. GSK was sent an 800-page document
detailing its alleged infringements yesterday. If
the charges stick, the drugs company theoretically
could be fined as much as 10 per cent of its £26
billion annual turnover.

GSK’s shares slipped by 7p to £16.50.

Source - The Times(UK)

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