Although the focus has been on next generation products for companies dealing with the patent cliff, it does not mean that
companies have given up on products nearing their patent expiration. In fact, companies are proactively defending the patents
of these products from potential infringement by generic-drug competitors. While there must be a sound legal reasoning for
such cases, for generic-drug companies, these complex legal defences by originator companies can be viewed as primarily designed
to delay entry of their products. Given that a blockbuster drug brings in billions of dollars per year in sales, even delaying
generic drug competition by weeks represents a considerable amount of money from continued sales of the product for the originator
company. Companies must be extremely careful when using legitimate means to deal with potential generic drug competition but
there are signs that this is not always the case.
Recently, the Office of Fair Trading (OFT) launched an investigation into GlaxoSmithKline (GSK) over its antidepressant product
Seroxat (paroxetine). The OFT is investigating whether GSK paid other companies to slow down production of cheaper, generic
versions of the drug, thereby costing the National Health Service (NHS) extra money because of the lack of alternatives to
the branded drug (4). GSK was accused of abusing its market dominance by using "pay-for-delay" agreements between 2001 and
2004 to persuade Alpharma, Genetics UK and Norton Healthcare to slow development of their generic alternatives (4). GSK admitted
that it had certain agreements with the companies highlighted, but denied motives of delaying entry of generic paroxetine
into the market.
This is the first time the OFT has launched such an investigation in the UK. Pay-for-delay agreements are taken seriously
because the NHS may be denied significant cost savings if companies are able to delay the potential emergence of generics
(5). At present, the OFT has not revealed how much GSK might have paid the other companies for delaying their products but
it has been suggested that if the OFT proves its case, GSK could be fined 30% of its UK turnover during the 2001–2004 period,
which has been estimated at £1.4 billion per year (4).
Although GSK's case came as a shock for the UK, pay-for-delay agreements have been investigated before in Europe. In January
2013, the European Commission announced the launching of an enquiry into the activities of Johnson & Johnson (J&J) and Novartis
over a potential pay-for-delay agreement between their respective Dutch subsidiaries in relation to fentanyl, a painkiller
(6). According to the European Commission, Janssen-Cilag, the J&J subsidiary supplying fentanyl in the Netherlands, came to
an agreement with generic competitor Sandoz, a Novartis subsidiary, in July 2005 (6). As a result, Sandoz avoided entering
the market with generic fentanyl patches from July 2005 until December 2006, even though there was no regulatory barrier to
develop and market generic versions of the product. The European Commission alleges that this practice may have delayed entry
of cheaper generic medicines for up to 17 months and kept prices for fentanyl artificially high in the Netherlands. If the
case is proven, then this may represent a breach of EU antitrust rules, specifically Article 101 of the Treaty on the Functioning
of the EU (TFEU), which bans practices that restrict competition (7).
The companies currently involved in European pay-for-delay cases are likely to be nervous because of a previous case involving
AstraZeneca. In June 2005, the European Commission adopted a decision that cost AstraZeneca a €60-million fine for misusing
the patent system and the procedures for marketing pharmaceuticals (8). In one instance, AstraZeneca had provided misleading
information to its parent offices in Belgium, Denmark, Germany, the Netherlands, Norway and the UK to prevent generic-drug
companies from competing against its antiulcer product Losec (omeprazole) (8). Another abuse by the company involved deregistration
of market authorisations for Losec in selected countries to exclude competition from generic firms and parallel traders (8).
AstraZeneca's defence that its conduct constituted normal competition was dismissed.