J&J Gets EU Complaint With Novartis on Pay-for-Delay Deal

Johnson & Johnson (JNJ) and Novartis AG (NOVN) were sent antitrust objections by European Union regulators over a pay-for-delay deal that may have hampered the sale of generic versions of pain killer fentanyl in the Netherlands.

The European Commission said the Dutch units of both companies struck a so-called co-promotion agreement in July 2005 to avoid rivaling each other. This deprived Dutch fentanyl customers of access to a cheaper pain killer for 17 months, it said in an e-mailed statement today.

“The commission is determined to fight undue delays in the market entry of generic medicines so that European citizens have access to affordable health care,” EU Competition Commissioner Joaquin Almunia said in the statement.

Antitrust regulators on both sides of the Atlantic are focusing on how settlements between companies that make branded medicines and generics producers might harm consumers. Les Laboratoires Servier, H. Lundbeck A/S (LUN) and Teva Pharmaceutical Industries Ltd. (TEVA), the world’s largest generic drugmaker, were last year sent statements of objections in probes over possible delays for generic drugs.

Johnson & Johnson and its unit Janssen-Cilag “will carefully examine the statement of objections and want to stress that it does not represent the commission’s final decision,” said Stefan Gijssels, a spokesman for Janssen in Beerse, Belgium in an e-mailed statement. Johnson & Johnson is based in New Brunswick, New Jersey.

Defense Rights

“Janssen continues to believe that these arrangements were legitimate,” Gijssels said. “We are cooperating fully” with the commission.

Novartis, based in Basel, Switzerland, said it and its Sandoz unit would examine the EU complaint and “avail themselves of their rights of defense,” spokesman Eric Althoff, said by e-mail. The EU statement allows the company “the opportunity to comment on the factual and legal issues that led the commission to believe that an infringement of the EU competition rules may have occurred.”

Regulators said the deal foresaw monthly payments between Janssen-Cilag and Sandoz as long as Novartis avoided marketing a generic version of the drug. This delayed Novartis’s sale of generic fentanyl patches until December 2006, the EU said.

Almunia said it’s important to ensure drug companies don’t “free ride our welfare state and insurance systems” as EU governments face constraints on public spending.

An EU statement of objections lays out the antitrust agency’s case before it takes a final decision on whether the companies violated the law. While the EU can impose fines of as much as 10 percent of yearly sales, fines are usually based on sales of the product involved.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.