EU regulators fine J&J, Novartis for generic drug deal

BRUSSELS Tue Dec 10, 2013 10:41am EST

The logo of Swiss drugmaker Novartis is seen at its headquarters in Basel October 22, 2013. REUTERS/Arnd Wiegmann

The logo of Swiss drugmaker Novartis is seen at its headquarters in Basel October 22, 2013.

Credit: Reuters/Arnd Wiegmann

BRUSSELS (Reuters) - European Union regulators have fined drugmakers Johnson & Johnson and Novartis 16.3 million euros ($22 million) for blocking the sale of a cheaper generic rival to their painkiller fentanyl.

The EU warned others against such anti-competitive deals.

This is the second penalty imposed by the European Commission over so-called pay-for-delay deals where brand-name companies pay generic rivals not to sell their versions of a drug at a fraction of the original price.

The practice, common in the pharmaceutical industry, has caught the attention of regulators around the world because it raises consumer bills and public healthcare costs.

The EU competition watchdog said on Tuesday that the deal between Johnson & Johnson and Novartis meant cancer patients did not have access to the cheaper generic version of fentanyl for 17 months from July 2005.

Johnson & Johnson and its Dutch unit, Janssen-Cilag, were fined 10.8 million euros while Novartis and Dutch subsidiary Sandoz were fined 5.5 million euros. The agreement ended after another drugmaker unveiled plans to sell its own version.

Sources familiar with the matter told Reuters last month that the fines were planned.

"Today's decision should make pharmaceutical companies think twice before engaging in such anti-competitive practices, which harm both patients and taxpayers," EU Competition Commissioner Joaquin Almunia said.

Novartis and Sandoz disputed the regulator's finding.

"(We) reject the Commission's allegation that the 2005 co-promotion agreement was intended to deprive patients in the Netherlands of cheaper medicines. We look forward to putting this historical matter behind us," they said in a statement.

The Commission fined Denmark's Lundbeck and eight others in June in its first pay-for-delay case and has two others in the pipeline involving Israel's Teva and its subsidiary Cephalon, and French drugmaker Servier.

Proponents of such agreements said they help companies avoid costly and lengthy litigation.

($1=0.7289 euros)

(Additional reporting by Caroline Copley in Zurich; Editing by Erica Billingham/Mark Heinrich)