Europeans hit J&J, Novartis with fines in pay-for-delay crackdown
Europe's antitrust crackdown in pharma marches on. Now, watchdogs are spanking Johnson & Johnson ($JNJ) and Novartis ($NVS) for keeping a generic version of a powerful painkiller off the market. The two drugmakers face a total fine of €16.3 million, or about $22 million.
It's the latest enforcement action by European Commission competition regulators, who have been probing pharma patent settlements for several years. Earlier this year, the EC fined Lundbeck and a handful of generics makers, and a host of other drugmakers are under investigation.
In these suspect "pay-for-delay" deals, branded drugmakers give their generics challengers cash, and the companies agree on a date for the copycat launch. Regulators say the arrangements unfairly delay competition, costing government payers and patients money. In the U.S., the Federal Trade Commission (FTC) has also been fighting these sorts of patent settlements, and the Supreme Court recently refused to protect drugmakers from FTC action on pay-for-delay agreements.
In this case, the Novartis generics unit Sandoz had challenged J&J's patent on fentanyl, a powerful pain reliever used by cancer patients. The drug is available in several forms, including the Duragesic patch sold by J&J. After settling the dispute with a copromotion agreement, J&J made monthly payments to Janssen-Cilag, a Dutch unit of J&J. The EU regulators say the payments were related to a deal to keep lower-cost fentanyl versions off the market for 17 months. J&J and Janssen-Cilag were fined €10.8 million, while Novartis and Sandoz were fined €5.5 million, Reuters reports.
As Reuters notes, Novartis and Sandoz said they disagree with the commission's allegations that the patent deal "was intended to deprive patients ... of cheaper medicines." The companies said they look forward to "putting this historical matter behind us."
In announcing the fines, regulators prodded other drugmakers to steer clear of pay-for-delay deals. "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 (as quoted by Reuters).
Apparently, the crackdown has had some effect. According to data released yesterday, drugmakers have backed off of patent deals watchdogs would classify as "pay-for-delay." The report found that most patent settlements now do not include payments to the generic challenger.
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When is it fair to slap a 'pay for delay' label on a patent settlement?