OFT issues statement of objections to certain pharmaceutical companies
36/13 19 April 2013
The OFT today issued a Statement of Objections to certain pharmaceutical companies alleging they acted to delay effective competition in the UK supply of paroxetine, a prominent antidepressant medicine.
The OFT alleges GlaxoSmithKline (GSK) concluded agreements which infringed competition law with each of Alpharma Limited (Alpharma), Generics (UK) Limited (GUK) and Norton Healthcare Limited (IVAX) ('the generic companies'), over the supply of paroxetine in the UK. The OFT also alleges GSK's conduct amounted to an abuse of a dominant position in the same market.
The generic companies were each attempting to supply a generic paroxetine product in competition to GSK's branded paroxetine product, Seroxat. However, in each case, GSK challenged the generic companies with allegations that their products would infringe GSK's patents. To resolve these disputes, each of the generic companies concluded one or more agreements with GSK.
The OFT's provisional view is that these agreements included substantial payments from GSK to the generic companies in return for their commitment to delay their plans to supply paroxetine independently.
The OFT considers that if companies act to delay the potential emergence of generic competition the NHS may be denied significant cost savings.
Ann Pope, Senior Director of Services, Infrastructure and Public Markets 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.
'No assumption should be made at this stage that there has been an infringement of competition law. We will carefully consider the parties' representations to the Statement of Objections before deciding whether competition law has in fact been infringed.'
- During the period in question, Seroxat was one of GSK's best selling medicines and was used to treat, among other conditions, depression and anxiety disorders.
- The allegations in this case concern so called 'pay for delay' agreements, where a manufacturer of branded pharmaceuticals makes payments (or other transfers of value) to a generic company in return for that generic company agreeing to delay its independent entry into the market for paroxetine.
- The patent disputes in this case were in the context of ongoing litigation or in anticipation of it.
- The Competition Act 1998 prohibits, among other matters, agreements or concerted practices that have the object or effect of preventing, restricting or distorting competition in the UK or a part of it and which may affect trade in the UK or a part of it (the Chapter I prohibition). Its European counterpart, Article 101 of the Treaty on the Functioning of the European Union (TFEU), covers equivalent agreements or concerted practices which may affect trade between EU Member States. The Competition Act 1998 also prohibits the abuse of a dominant position that may affect trade in the UK or a part of it (the Chapter II prohibition).
- Any business found to have infringed the Competition Act 1998 and/or the TFEU could be fined up to 10 per cent of its worldwide turnover. In calculating financial penalties, the OFT takes into account a number of factors including seriousness of the infringement(s), turnover in the relevant market and any mitigating and/or aggravating factors.
- The Statement of Objections is addressed to the following companies, which the OFT provisionally considers were either directly involved in the alleged infringement(s) and/or are liable as parent companies of the companies directly involved, or as successors to these companies, in relation to the following alleged infringements:
- Alpharma: Actavis UK Limited (formerly Alpharma Limited), Xellia Pharmaceuticals ApS (formerly Alpharma ApS) and Alpharma LLC (formerly Alpharma Inc): This is in relation to an alleged infringement of the Chapter I prohibition between 2002 and 2004.
- GSK: Beecham Group plc, GlaxoSmithKline UK Limited, GlaxoSmithKline plc and SmithKline Beecham Limited (formerly SmithKline Beecham plc). This is in relation to alleged infringements of the Chapter I prohibition between 2001 and 2004, and/or an alleged infringement of the Chapter II prohibition between 2001 and 2003, and/or Article 101 of the TFEU in 2004.
- GUK: Generics (UK) Limited and Merck KGaA. This is in relation to an alleged infringement of the Chapter I prohibition between 2002 and 2004 and/or Article 101 of the TFEU in 2004.
- IVAX: IVAX LLC (formerly IVAX Corporation) and Norton Healthcare Limited (which previously traded as IVAX Pharmaceuticals UK). This is in relation to an alleged infringement of the Chapter I prohibition between 2001 and 2004 and/or Article 101 of the TFEU in 2004.
- A Statement of Objections gives notice of a proposed infringement decision under the Competition Act 1998 and/or the TFEU to the parties involved. The parties then have the opportunity to make written and oral representations in response to the case set out by the OFT. Such representations will be considered by the OFT before any final decision is made.
- The Statement of Objections will not be published. In accordance with the OFT's guidance on Involving third parties in Competition Act investigations any person who wishes to comment on the OFT's provisional findings, and who is in a position to materially assist the OFT in testing its factual, legal or economic arguments, may request a non-confidential version of the Statement of Objections by contacting the OFT no later than Friday 17 May 2013.
- Further updates on this case will appear on the project page.
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