Glaxo Sued Over Paxil Knockoff

GlaxoSmithKline, the world’s second-biggest drug maker, was sued Thursday by a coalition of California seniors who claim that the company is marketing a knockoff of its Paxil antidepressant to undercut a generic competitor.

Glaxo has an agreement with Pharmaceutical Resources Inc.’s Par Pharmaceutical subsidiary to sell an unbranded version of paroxetine, the key ingredient in Paxil. Glaxo reached the agreement with Par Pharmaceutical to settle a lawsuit after Canadian drug maker Apotex Inc. introduced its own generic form of the medicine.

The Congress of California Seniors, a coalition of consumer groups that have sued the drug industry on other issues, claims that the Par Pharmaceutical drug is an effort to undermine Apotex sales. The suit contends that Glaxo and Par Pharmaceutical are deceiving consumers into paying more than necessary for paroxetine and discouraging health plans from purchasing the lower-cost Apotex generic.

“We feel strongly what they’ve done is manipulation in order to keep as high a profit as they can realize,” said Joan Lee, chairwoman of the Sacramento chapter of the Gray Panthers and legislative liaison to the state organization. “It’s time we step up and stop these practices.”

The lawsuit was filed in San Francisco Superior Court.

Par Pharmaceutical spokesman Steve Mock said the lawsuit “makes no sense” because the agreement was reached to resolve a lawsuit in which Par was seeking to sell its own generic.

“Authorized generics are pro-competitive,” Mock said. “If we were not on the market and Apotex were on the market alone for 180 days, I assure you the price they were charging wouldn’t be lower than it is now. It would be higher.”

Mock said both companies were selling their versions for about 45% less than Glaxo’s price for branded Paxil. Par Pharmaceutical has about 45% of the market, while Apotex has a 40% market share, he said. Glaxo gets a percentage of Par Pharmaceutical sales.

Brentford, England-based Glaxo’s U.S. shares fell 98 cents to $39.49 while shares of Spring Valley, N.Y.-based Pharmaceutical Resources rose 60 cents to $59.96, both on the New York Stock Exchange.