FTC could sanction AstraZeneca over alleged collusion

South Korea’s Fair Trade Commission is looking to impose sanctions against AstraZeneca over allegations that the global pharmaceutical firm colluded with a local firm to hinder the launch of cheaper generic drugs.

The FTC has recently sent out an audit report to the two drug makers, according to industry sources on Monday. The audit report, which is considered as a prosecutor’s indictment, contained the regulator’s opinion that AstraZeneca provided financial benefits to Alvogen Korea to stop the company from developing a generic version of its patented drug.

Consequently, the regulator is calling for fines and prosecution charges, as the two companies’ collusion violated the Fair Trade Act.

The FTC declined to give specifics as to what was exactly included in the document and when it was delivered to each firm, saying that the regulator could not discuss details about ongoing cases.

An FTC official said the antitrust authorities usually allow a three-to-four-week response period for companies to come up with their own reports on the related matter and submit it to the FTC.

Once the FTC receives reports from AstraZeneca and Alvogen Korea, its upper-level committee composed of nine members will schedule a date to discuss the case with the auditor and representatives from each company, similar to how legal disputes are carried out in court.

AstraZeneca Korea told The Korea Herald that the company has actively cooperated with the related investigation, but declined to give details regarding the ongoing case.

In 2011, the country’s antitrust authorities fined GSK, formerly known as GlaxoSmithKline, for colluding with local drug maker Dong-A Pharmaceutical to hinder the production and sales of its generic drug Ondaron.

According to the FTC, the case marked the first revelation that a multinational drug firm was found to have offered financial benefits here in return for the withdrawal of a generic drug developed by a local drug maker.

GSK gave the exclusive sales rights of its drugs and financial incentives to Dong-A Pharmaceutical on the condition that the local drug maker would not develop or sell Ondaron.

The FTC imposed a total fine of 5.3 billion won ($4.1 million) on the two companies at first, but the final penalties were adjusted to 2.7 billion won after the Supreme Court’s ruling. 

By Kan Hyeong-woo (hwkan@heraldcorp.com)