GlaxoSmithKline is the Perfect Example of a Company Engaging in Anti-Competitive Behavior and Price Gouging

May 15, 2019

 

 

The behavior of drug manufacturers, especially when they use their power to stifle competition, is a major reason for why prescription drugs are so unaffordable. GlaxoSmithKline, a British multinational pharmaceutical company headquartered in London and worth $30 billion, is a perfect example of how drug companies engage in price gouging and anti-competitive behavior to increase drug costs. A new report by Patients for Affordable Drugs lays out how this corporation filed fraudulent citizen petitions, tried to prolong its exclusivity periods, disregarded patient safety by bribing doctors, and greatly increased prices and stifled competition.

 

These practices have been occurring for a long time. Back in 2002, the Federal Trade Commission (FTC) found that GlaxoSmithKline abused a provision in the Hatch-Waxman Act (which governs approval of prescription drugs) to delay generic competition for Paxil, their popular antidepressant drug. The company filed frivolous patent infringement laws that triggered an automatic pause on the Food and Drug Administration's (FDA) approval of generic drugs. As a result, GlaxoSmithKline was able to delay the entry of a generic version of Paxil by 65 months (over five years!), forcing consumers to pay higher prices and earning more than $5 billion in profits.

 

Between 2004 and 2005, GlaxoSmithKline submitted a number of sham citizen petitions to the FDA right before its drug Flonase was about to go off patent, in order to delay generic drug competition. Citizen petitions can be valuable and point out problems with drugs, but recently most of them are submitted by drug companies just to delay drugs that might compete with their medicines. Flonase was a very profitable drug for the company, earning them more than $750 million in 2004. And GlaxoSmithKline's citizen petitions delayed it for 23 months, enabling the company to earn another $2.5 billion. The FDA rejected the company's petitions as illegitimate and then approved a generic version of Flonase.

 

GlaxoSmithKline has also paid doctors in order to increase its profits. In 2012 the Department of Justice reached a huge healthcare fraud settlement with the company. GlaxoSmithKline pleaded guilty to falsely advertising the safety and efficacy of drugs to consumers and healthcare providers, misbranding drugs for off-label use, bribing doctors to promote and prescribe medicines, leaving out alarming safety information in its reports to the FDA, and submitting inflated price reports so it could underpay Medicaid. As a result, DOJ required the company to follow an agreement for five years and implement major changes in the way it did business.

 

Next, in 2016 the United Kingdom fined GlaxoSmithKline $54.5 million for entering into pay-for-delay agreements with generic companies, paying them not to bring a generic version of Paxil to market. This also forced consumers to pay higher prices and stifled competition. In recent years, the Supreme Court has ruled that pay-for-delay agreements are anticompetitive and legislators have introduced bills to ban the practice.

 

And GlaxoSmithKline has recently raised the prices on several of its most popular drugs, making it difficult for Americans to afford them. In 2017 the company increased the price of its drug Advair (a long term inhaler for people with asthma) by 17.7%, and obtained patents on the drug's delivery system in order to block competition and keep prices high. Leaked documents also showed that GlaxoSmithKline paid rebates to the pharmacy benefit manager (PBM) Express Scripts so that Express Scripts would push patients toward Advair instead of a cheaper generic drug.

 

This is a sorry record of dishonesty, anticompetitive behavior, and abuse. GlaxoSmithKline should stop all these harmful practices that hurt competition and increase drug costs. But the company is unlikely to do this on its own. Congress should pass legislation to outlaw these behaviors, and the Department of Justice should closely monitor the company and enact severe consequences for any further violations.

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