South Korea’s antitrust watchdog is mulling disciplinary action on multinational pharmaceutical company AstraZeneca plc upon finding rigging activity with another firm to prevent release of cheaper generic drugs.

According to multiple industry sources on Monday, the Fair Trade Commission (FTC) has recently sent AstraZeneca and Alvogen Korea its review results after concluding rigging activity. The watchdog found that AstraZeneca provided economic benefits to Alvogen Korea to prevent release of a generic of a new drug it holds patent of.

Examiners found that their activity violates the country’s fair trade act and should be fined and receive prosecution investigation. The FTC declined to comment further on the details.

There have been previous cases where original drug manufacturers like AstraZeneca with new drug patent provide economic benefits to generic manufacturers to prevent generic entry into the market. The activity is referred to as “reverse payment” given that a new drug manufacturer provides benefits to generic manufacturers instead of generic drug makers offering settlements to new drug manufacturers generally in times of patent disputes.

Reverse payment allows both new drug and generic manufacturers benefits and to avoid competition but consumers lose the opportunity to purchase cheaper copy drugs.

In 2011, the FTC imposed penalty on GlaxoSmithKline plc and Dong-A Pharmaceuticals for the first time as they were engaged in reverse payment activity.

At the time, GSK was found to have provided Dong-A Pharmaceuticals with various benefits such as sales rights of its anti-nausea drug Zofran at national hospitals, exclusive sales rights of yet-to-be-released new drugs, and financial incentives in return for not producing and selling its self-developed generic Ondaron.

The two companies were fined a combined 5.34 billion won ($4.1 million) initially but the amount was reduced to 2.705 billion won by the top court.

By Pulse

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