Drugs giant accused over deals that kept savings away from NHS

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Drugs giant GlaxoSmithKline has been accused by the competition watchdog of paying off firms to delay the launch of cheap versions of its antidepressant treatment in a move that denied the NHS “significant” cost savings.

The Office of Fair Trading (OFT) is alleging that GSK offered “substantial” payments to Alpharma, Generics and Norton Healthcare, to hold off from supplying rival medicines to its blockbuster Seroxat treatment.

The allegations date back to the period between 2001 and 2004.

GSK’s rivals were attempting to supply a generic paroxetine product in competition to Seroxat, but GSK accused each of infringing its patents and to resolve the disputes, they effectively agreed to be paid off, according to the OFT.

The alleged actions by all the firms involved are a potential infringement of competition law, while GSK is also accused of abusing its dominant market position.

The OFT’s senior director of services, infrastructure and public markets Ann Pope 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.”

The OFT said the firms will now be asked to respond to its allegations before deciding if competition law has been infringed, a decision which will not be made until later this year at the earliest.

Seroxat is one of GSK’s best-selling medicines, but has been hit by generic competition in recent years, with sales falling 14 per cent in 2012 to £374m.

Sales of the drug fell by nearly a fifth in the last three months of last year alone.

A GSK spokesman said: “We very strongly believe that we acted within the law, as the holder of valid patents for paroxetine, in entering the agreements under investigation.”

It added that the agreements with competitors – reached between 2001 and 2004 – resulted in generic versions of Seroxat coming on to the market before its patent ran out in 2004.

The OFT says the market value of paroxetine to the NHS in 2001 was £100m.

The firms now have until August to respond.