GlaxoSmithKline is appealing a $54.5 million fine that was recently levied by UK regulators for illegally conspiring with several generic rivals to delay marketing of a lower-cost version of its Paxil antidepressant. The generic manufacturers were also fined a total of about $7 million and are appealing those decisions, as well, according to documents posted this week on a UK government web site.
The appeals come two months after the UK Competitions and Market Authority found that between 2001 and 2004, Glaxo made payments totaling about $72 million to several generic companies. As we wrote previously, the deals were reached as part of a settlement to end patent litigation that was filed by Glaxo against the generic drug makers.
The UK regulator issued the fines amid ongoing concern over these settlements, which are often called pay-to-delay deals. In these deals, a brand-name drug company pays cash or transfers something else of value to a generic rival, which then agrees to delay launching its own version of the medicine.
For the past several years, the pharmaceutical industry has sparred with regulators in the United States and Europe. Regulators argue that these deals are anticompetitive, force consumers to overpay for medicines, and contribute to societal health care bills. In the US, the Federal Trade Commission estimates such deals cost Americans about $3.5 billion annually.
Drug makers counter that the deals are not only legal, but allow lower-cost generic drugs to reach consumers faster than if patent litigation continued.
At the time that the CMA levied the fines two months ago, Glaxo maintained the deals saved the UK’s National Health Service more than $20 million because the patent litigation was settled in a timely manner. In 2001, by the way, Paxil sales in the United Kingdom exceeded $130 million.
In its appeal, which was filed on Monday, Glaxo argued that the UK’s CMA failed to prove the deals restricted competition and that its own tactics did not constitute abuse of a dominant position in the market for antidepressants.
The other drug makers that were fined cited similar objections in their appeals with the UK Competition Appeal Tribunal. Among the companies is Merck KGaA, the brand-name drug maker that had owned one of the companies that struck a deal with Glaxo. Another is Actavis, which is now owned by Allergan (AGN).
A spokeswoman for the CMA said that it’s not clear how long it will take before the Tribunal hears the cases.
Last month, by the way, the FTC filed a lawsuit against Endo Pharmaceuticals and three other drug makers for allegedly paying generic rivals to delay launches of copycat versions of two painkillers. The move gained notice because it was the first lawsuit in which the agency has argued that a deal involving a so-called authorized generic thwarted competition.
In these arrangements, a brand-name drug maker would agree not to sell its own lower-priced version of its medicine, which it might otherwise do to compete with a generic drug maker. The case is being closely watched because the US courts have been divided over the extent to which a transfer of something other than cash constitutes antitrust scrutiny.