EU Imposes $22M in Fines to J&J, Novartis for Delaying Generic Fentanyl
The European Commission has imposed fines of $22M against Johnson & Johnson (J&J) and Novartis. In July 2005, their respective Dutch subsidiaries concluded an anticompetitive agreement to delay the market entry of a cheaper generic version of the pain killer fentanyl in the Netherlands, in breach of EU antitrust rules. Fentanyl is a pain-killer 100 times more potent than morphine.
Commission Vice-President Joaquín Almunia, in charge of competition policy, said: "J&J paid Novartis to delay the entry of a generic pain killer. 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 anticompetitive practices, which harm both patients and taxpayers."
J&J initially developed Fentanyl and has commercialized it in different formats since the 1960s. In 2005, J&J's protection on the Fentanyl depot patch had expired in the Netherlands and Novartis' Dutch subsidiary, Sandoz, was on the verge of launching its generic fentanyl depot patch. It had already produced the necessary packaging material.
However, in July 2005, instead of actually starting to sell the generic version, Sandoz concluded a so-called "co-promotion agreement" with Janssen-Cilag, J&J's Dutch subsidiary. The agreement provided strong incentives for Sandoz not to enter the market. Indeed, the agreed monthly payments exceeded the profits that Sandoz expected to obtain from selling its generic product, for as long as there was no generic entry. Consequently, Sandoz did not offer its product on the market. The agreement was stopped in December 2006 when a third party was about to launch a generic fentanyl patch.
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.
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