European Commission (EC) Charges Johnson & Johnson and Novartis AG With Pay-to-Delay

In the latest bid by regulators to squash so-called pay-to-delay deals, the European Commission has filed a complaint against Johnson & Johnson and Novartis – and its Sandoz generic subsidiary – for allegedly conspiring to delay the generic introduction of a version of the fentanyl pain patch in the Netherlands. The move had been expected after European antitrust regulators opened a probe into the drugmakers in October 2011 as part of a widening crackdown on such deals. The concern has picked up steam in recent years as governments attempt to grapple with rising healthcare costs and investigators have gone so far as to raid offices seeking incriminating documentation. Last July, several drugmakers – including Lundbeck, Merck KGgA and Ranbaxy Laboratories – were charged with blocking the entry of generic versions of the best-selling Celexa antidepressant. The EU also charged Servier and several other drugmakers, including Teva Pharmaceuticals (TEVA), with conspiring to delay a generic version of the Perindopril heart medicine. In this latest case, a J&J unit known as Janssen-Cilag struck a deal with Sandoz in 2005, a time when there were no regulatory barriers to develop and market generic versions of fentanyl patches, which meant Sandoz could have sold a version in the Dutch market. The J&J unit agreed to make monthly payments to Sandoz for as long as no generic was launched, according to the EU. Consequently, Sandoz abstained from selling generic fentanyl patches in the Dutch market from July 2005 until December 2006. The EU contends the deal may have delayed the entry of a cheaper generic for 17 months and kept prices for fentanyl in the Netherlands artificially high. “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,” says Joaquín Almunia, EC vp in charge of competition policy, in a statement.

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