UPDATE 3-EU regulator charges J&J, Novartis over Dutch painkiller delay

Thu Jan 31, 2013 10:05am EST

By Foo Yun Chee and Rex Merrifield

BRUSSELS Jan 31 (Reuters) - EU regulators stepped up their fight against drug companies suspected of blocking cheap generic medicines, charging Johnson & Johnson and Novartis over a painkiller called fentanyl.

The antitrust watchdog said it believed the two had agreed a "pay-for-delay" deal on generic versions of the drug, sold under brand names including Duragesic, hurting Dutch consumers and healthcare providers.

Novartis and its Sandoz unit, in this case the suppliers of the generic version, said they would examine the regulator's "statement of objections" and would take advantage of their rights of defence against the charges.

Johnson & Johnson's Dutch unit Janssen-Cilag said it would cooperate with the Commission and defended the deal.

"The arrangement we had with Sandoz was legitimate. We believe we did not infringe any rules," Janssen spokesman Stefan Gijssels said.

It is the latest such case launched by the European Commission after it filed charges against Merck KGaA, Lundbeck, Servier and several other pharmaceutical companies last year.

Regulators on both sides of the Atlantic have warned pharmaceutical companies against agreements where brand-name companies pay generic competitors to withhold their rival drugs from the market, saying such deals result in additional costs for consumers.

The Commission, which acts as antitrust regulator in the 27-nation European Union, said it had sent its charge sheet to U.S.-based Johnson & Johnson and Swiss group Novartis over an agreement between their Dutch subsidiaries.

"If our preliminary conclusions are confirmed, the Dutch subsidiaries ... 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 painkiller," the Commission said in a statement.

It said the agreement between Janssen-Cilag and Sandoz meant Dutch consumers were not able to get access to cheaper generic fentanyl from July 2005 to December 2006.

The charges arose from an investigation of the pharmaceuticals sector after a Commission report highlighted deals between major drugmakers aimed at hindering or blocking generic medicines in pay-for-delay deals.

The EU executive can fine companies up to 10 percent of their global sales for breaching EU antitrust rules.

Novartis shares were 0.2 percent lower at 62 Swiss francs by 1557 GMT, in line with the broader European pharmaceutical sector.

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