By Lee Kyung-min
A district court has ordered two pharmaceutical companies ― GlaxoSmithKline (GSK) and Dong-A ST ― to pay the National Health Insurance Service (NHIS) 867 million won in compensation for financial damages caused by their collusion.
The Seoul Western District Court said Tuesday that it recently ruled in favor of the NHIS which filed the suit following a Fair Trade Commission (FTC) decision on collusion.
According to the court, the U.K.-based GSK, the manufacturer of an anti-nausea drug, Zofran, filed a patent suit against local pharmaceutical firm Dong-A ST in 2000, claiming that the latter’s generic drug, Ondaron, infringed on the former’s patent.
In an attempt to avoid fierce market competition with the cheaper generic drug, GSK sought a settlement, promising to guarantee Dong-A exclusive rights to sell original drugs it produces, as well as other incentives, in return for the Korean firm withdrawing Ondaron from the market.
The FTC said in 2011 that such a deal was in violation of the law on fair trade, slapping fines of 3.1 billion won on GSK and 2.1 billion won on Dong-A.
The two firms refuted the charges, demanding that the courts annul the fines and other administrative orders by the FTC. But the Supreme Court ruled in favor of the FTC in February 2014.
After the ruling, the NHIS filed a suit in September that year.
The NHIS said it had to pay more to cover the original drug than it would have paid for the generic version because the former was more expensive. It also said the collusion deprived consumers of the freedom to choose cheaper drugs with a similar effect due to the limited options.
“The two companies made the deal to protect each other’s interest. It not only interfered with fair competition in the market but also made the NHIS cover unduly inflated costs,” the court said.
The companies said they are considering whether to appeal or not.