Drugmakers Johnson & Johnson and Novartis AG have been fined a total of €16.3 million ($22.4 million) by European regulators for entering into an anti-competitive agreement to delay the introduction of a generic painkiller in the Netherlands. According to the European Commission, in 2005 the respective Dutch subsidiaries of Novartis and J&J entered into agreement to prevent the entry of a generic version of J&J’s fentanyl. This came after the protection on its brand-name fentanyl depot patch expired in the Netherlands, and just as Novartis unit Sandoz BV was poised to launch its own fentanyl patch. Joaquin Almunia, EU commissioner for competition policy, said in a statement:
J&J paid Novartis to delay the entry of a generic painkiller. The two companies shockingly deprived patients in the Netherlands, including people suffering from cancer, from access to a cheaper version of this medicine. Today’s decision should make pharmaceutical companies think twice before engaging into such anti-competitive practices.
J&J was fined €10.8 million, while Novartis was ordered to pay €5.5 million. The antitrust watchdog said when J&J’s protection for the fentanyl depot patch was about to expire, Sandoz, then known as Hexal BV, was so close to launching a generic version that it had already produced the necessary packaging material for the rollout.
However, in July 2005, Sandoz was said to have entered into a “pay-for-delay” agreement with Janssen-Cilag, J&J’s Dutch subsidiary, under the guise of a “co-promotion” agreement. Under that agreement Sandoz received monthly payments that exceeded the profits Sandoz expected to reap from selling its generic, as long as it kept the generic off the market, according to the EC. The agreement held up until December of the following year when a third party was about to launch its own version of the fentanyl patch. The EC said:
The agreement therefore delayed the entry of a cheaper generic medicine for 17 months and kept prices for fentanyl in the Netherlands artificially high, to the detriment of patients and taxpayers who finance the Dutch health system.
The commission pointed to internal documents that stated Sandoz and Janssen-Cilag agreed to cooperate so as “not to have a depot generic on the market and in that way to keep the high current price,” and that Sandoz would abstain from entering the Dutch market in exchange for “a part of [the] cake.” The EC said that Janssen-Cilag didn’t consider any other potential partners for its co-promotion agreement and that Sandoz actually engaged in very limited or no actual co-promotion activities.
In recent years, drugmakers’ use of pay-for-delay agreements, such as the one referred to above, have repeatedly caught the attention of antitrust regulators in the U.S. and Europe. For example, the EU launched an 18-month, sector-wide competition inquiry in 2008 that began with unannounced raids on some of the world’s largest pharmaceutical companies, including J&J and Novartis. Then in July 2009, the commission released a final report of its inquiry, finding that originator drug companies often brought litigation and entered into settlements with generic-drug makers in order to block or delay cheaper versions of their brand medications from reaching the European market. Subsequently, the commission launched two other investigations into the pay-for-delay deals, issuing statements of objections in 2012 to Servier SAS regarding the cardiovascular medicine perindopril, and to H. Lundbeck A/S for the antidepressant citalopram. It’s good to see governmental agencies doing their jobs and doing them well.
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