EC Probes J&J and Novartis

The European Commission has launched an antitrust investigation to examine whether contracts between Johnson & Johnson (J&J) and Novartis were designed to delay the market entry of generic versions of Fentanyl in the Netherlands. Fentanyl, developed by J&J, is a strong painkiller for chronic pain. Novartis’ Sandoz unit markets a generic version of the drug in certain markets where Fentanyl’s patents have expired.

According to a press statement, the EC will deal with the case “as a matter of priority.”

“I regard this sector as a priority in terms of enforcement of competition rules given its importance for consumers and for governments’ finances,” Joaquín Almunia, vice-president of the commission in charge of competition policy, said in a press statement. “Pharmaceutical companies are already rewarded for their innovation efforts by the patents they are granted. Paying a competitor to stay out of the market is a restriction of competition that the Commission will not tolerate.”

Although no press statements have, at the time of going to print, been released by J&J and Novartis, a third-party media report from Reuters claims that J&J has said the investigation focuses on contractual arrangements with Hexal/Sandoz (Hexal was acquired by Novartis and integrated into its Sandoz unit in 2005) concerning Fentanyl patches in the Netherlands during the period 2005–2006. A report from the Wall Street Journal also claimed that a J&J spokesperson had said that J&J had a contractual agreement with Sandoz in 2005 and 2006 with regards to Fentanyl patches in the Netherlands. Both reports said that Novartis declined to comment.

According to the EC statement, the Commission is keeping a close eye on business practices in the pharmaceutical industry. The increased scrutiny follows a previous sector inquiry (2008–2009) that concluded that originator drug companies may be paying to delay the market entry of generic medicines. The main finding of the inquiry was that competition does not work as well as it should, and that there has been both a decline in innovation and delay in the introduction of generic medicines.

Since the inquiry finished in 2009, the EC has launched antitrust cases against several pharmaceutical companies, including Servier, Lundbeck, and Cephalon, which was recently acquired by Teva Pharmaceutical Industries, for possible violations of the EU’s competition rules.