UPDATE 2-EU regulator probes J&J, Novartis generic drug deals

Fri Oct 21, 2011 8:10am EDT

* EU suspects strategy to delay generic versions of painkiller

* Probe part of ongoing drive against delays to generic drugs

* Investigation covers fentanyl patches sold in Netherlands

By Foo Yun Chee

BRUSSELS, Oct 21 (Reuters) - EU antitrust regulators are investigating agreements between Johnson & Johnson and Novartis over concerns they may have delayed the entry of a generic version of a powerful painkiller on to the Dutch market.

The European Commission said in a statement that if the contractual agreements were aimed at or had the effect of blocking the generic drug from the market, they would breach EU antitrust rules.

The probe into the sale of fentanyl patches is the latest action by the European Union's executive arm against suspected collusion to block the sale of cheaper generic medicines.

"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," said EU Competition Commissioner Joaquin Almunia.

Stefan Gijssels, a spokesman for Janssen, the European arm of U.S.-based J&J, said it was cooperating fully with the authorities in their investigation.

"The investigation focuses on contractual arrangements with Hexal/Sandoz concerning fentanyl patches in the Netherlands in the period 2005-2006," he added.

A spokesman for Swiss-based Novartis, whose Sandoz division is a major player in the global generics market, said: "We don't comment on ongoing procedures." Sandoz bought Hexal in 2005.

The Commission produced a damning report on the pharmaceuticals sector in 2009, which found delays in generic medicines reaching the market were costing European consumers billions of euros.

A year ago it said it planned to review drug patent settlements -- and AstraZeneca was raided in December by antitrust regulators seeking evidence about steps it had taken to protect the $5 billion-a-year heartburn and stomach ulcer drug Nexium from generic competition.

It has also opened antitrust investigations against French drugmaker Servier, Denmark's Lundbeck and U.S.-based Cephalon.

U.S. antitrust regulators have also been looking critically at so-called "pay-for-delay" settlement deals and other tactics used to delay generics.

"I regard this sector as a priority in terms of enforcement of competition rules given its importance for consumers and for governments' finances," said Almunia.

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