Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC Investigating Whether Agreement Between Johnson & Johnson, Novartis Restrained Competition for Pain Killer, (Feb 1, 2013)

By Jeffrey May, J.D.

The European Commission (EC) announced yesterday that it has issued a statement of objections (SO) to U.S.-based Johnson & Johnson and Novartis of Switzerland over an alleged agreement between their respective Dutch subsidiaries to delay the market entry of cheaper generic versions of the pain-killer fentanyl. The parties will now have the opportunity to respond to the EC's assertions and request an oral hearing to present their comments on the case before representatives of the EC and national competition authorities.

According to the EC announcement, Janssen-Cilag B.V., the J&J subsidiary supplying the pain-killer fentanyl in the Netherlands, entered into a so-called “co-promotion agreement” with Sandoz B.V., a Novartis subsidiary, in July 2005. At the time, there were no regulatory barriers to develop and market generic versions of the fentanyl patches and therefore no barrier for Sandoz to enter the Dutch market.

Janssen-Cilag purportedly made payments to Sandoz for as long Sandoz stayed out of the market for generic fentanyl patches from July 2005 until December 2006. This may have delayed the entry of a cheaper generic medicine for seventeen months and kept prices for fentanyl in the Netherlands artificially high, the EC contends.

“If our preliminary conclusions are confirmed, the Dutch subsidiaries of Johnson & Johnson and Novartis entered into a so-called 'co-promotion' agreement to avoid competing against each other, depriving users of fentanyl in the Netherlands from access to a cheaper pain killer,” said Joaquin Almunia, EC Vice President in charge of competition policy. “The Commission is determined to fight undue delays in the market entry of generic medicines so that European citizens have access to affordable healthcare. It is also important to make sure that pharmaceutical companies do not free ride our welfare state and health insurance systems, especially in this period of constraints on public spending.”

The EC's fentanyl investigation commenced in October 2011. There are a number of other ongoing antitrust investigations in the European pharmaceutical sector. In April 2011, the EC announced that it had opened a formal antitrust investigation to assess whether an agreement between U.S.-based pharmaceutical company Cephalon and Israel-based generic drugs firm Teva might have hindered the entry of generic competition for sleeping disorder medication Modafinil in Europe. More recently, in July 2012, the EC sent SOs to more than 14 companies in two major cases involving generic antidepressant citalopram and cardio-vascular medicine perindopril.

Companies: Johnson & Johnson; Novartis; Janssen-Cilag B.V.; Sandoz B.V.

News: Antitrust