GlaxoSmithKline (NYSE:GSK) Charged With Anti-Competitive Practices And Fined A Whopping £37.6 Million.

GlaxoSmithKline (NYSE:GSK) Charged With Anti-Competitive Practices And Fined A Whopping £37.6 Million.

GlaxoSmithKline plc (ADR) (NYSE:GSK) has been charged with committing anti-competitive practices with relation to its antidepressant drug, Seroxat. The British Competition and Markets Authority charged the drug maker for making a payment of over 50 million pounds sterling to generic drug makers between the years 2001 and 2004. In return, the generic drug makers had to delay the launching of cheaper versions of the drug, which was a blockbuster for it. As a result, the British drug manufacturer has been slapped with a fine of 37.6 million pounds sterling.

Appealing The Ruling

GlaxoSmithKline said that it was not ready to accept the ruling of the anti-trust regulator. It also refused to accept that its action saved NHS the valuable money. As a result, the company indicated that it would consider an appeal against the ruling.

The Company said that it reached agreement with the generic companies for a different purpose. That was to settle complex, costly, and uncertain patent disputes. The drug maker said that the deal enabled those generic drug makers to enter the market with a Paroxetine product earlier. Therefore, NHS could save more than 15 million pounds sterling. Paroxetine was an active ingredient in Seroxat.

Significant Price Drop

The regulator said that NHS has been deprived of a significant drop in price in the absence of the generic drug makers entering the market early. The CMA pointed out average prices plunged more than 70% within two years at the end of 2003. It blamed the ‘pay-for-delay’ agreements adopted by GlaxoSmithKline. The regulator appeared to be keen on sending a strong signal to the pharmaceutical firms that it would pursue with a firm hand when it comes to stifling competition that hurts the customers’ interests. In this case, it was NHS and the taxpayers.

CMA’s Executive Director for Enforcement, Michael Grenfell, said that its investigations demonstrated its determination to enforce action against anyone, regardless of the size of the company including GlaxoSmithKline. He said that it was necessary to protect consumers and, therefore, cracking down on malpractices was an essential one. Also, he said that such actions would stimulate innovation, as well as, growth.