Gaviscon £10.2 m fine
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The (soon-to-be-no-longer) OFT have just ruled on household products giant Reckitt Benckiser abuse of it’s monopoly position. It has agreed to pay a £10.2m fine after admitting to abusing its monopoly position for the supply of heartburn drug Gaviscon.
It also offers a good discussion of the role of patents as barriers to entry.
“Where a branded medicine’s patent has expired and a ‘generic name’ has been assigned to it, GPs can use their prescribing software to search for the brand and then provide patients with an ‘open’ prescription that lists its generic name. Pharmacies that receive these prescriptions can choose whether to dispense the relevant brand or equivalent but cheaper generic medicines. This choice provides for strong price competition between pharmaceutical suppliers and can result in considerable savings to the NHS.
The OFT’s allegation was that Reckitt Benckiser withdrew NHS packs of Gaviscon Original Liquid from the NHS prescription channel after the product’s patent had expired but before the publication of the generic name for it, so that more prescriptions would be issued for its alternative product, Gaviscon Advance Liquid. Pharmacies that receive prescriptions for Gaviscon Advance Liquid must dispense it, as it is patent protected and there are no generic equivalent medicines.”
The OFT has stated: “‘This case underlines our determination to prevent companies with a dominant position in a market from using their strength to seek to restrict competition from rivals. The imposition of penalties should serve to deter firms from engaging in anticompetitive behaviour of this sort in future.”
More here.
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