Bloomberg News

Johnson & Johnson, Novartis Face Antitrust Probe on Generics

October 21, 2011

(Updates to add J&J spokesman comment in fifth paragraph.)

Oct. 21 (Bloomberg) -- Johnson & Johnson and Novartis AG are under investigation by the European Union’s antitrust regulator over contracts that may have hampered the sale of generic versions of pain killer Fentanyl in the Netherlands.

The EU authority said it’s probing contractual arrangements between J&J and Novartis that may have had the “object or effect of hindering entry” of the generic drug onto the Dutch market. Basel, Switzerland-based Novartis owns Sandoz, a generic-drug maker.

“Pharmaceutical companies are already rewarded for their innovation efforts by the patents they are granted,” EU Antitrust Commissioner Joaquin Almunia said in an e-mailed statement. “Paying a competitor to stay out of the market is a restriction of competition that the commission will not tolerate.”

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. Bayer AG was among drug firms told by EU officials in January to submit details of patent-settlement deals that may be used to delay the sale of generic versions of medicines. Drug developers use various ways to delay generics, the EU said in a 2009 report.

The investigation is related to a contractual agreement J&J had with Sandoz in the Netherlands and is limited to that country, Stefan Gijssels, a spokesman for J&J’s Janssen subsidiary, said in a telephone interview today. The company will cooperate fully with authorities, he said.

Teva Deal

“It’s important to underline that the commission has not made a finding that Janssen did something wrong in the Netherlands," Gijssels said. ‘‘It’s the start of an investigation."

‘‘We don’t comment on ongoing procedures,’’ Eric Althoff, a spokesman for Novartis, said in an e-mail.

EU antitrust regulators are also investigating Teva Pharmaceutical Industries Ltd., the world’s largest generic drugmaker, and Cephalon Inc. over a 2005 agreement that may have delayed generic versions of Provigil. Teva last week completed its acquisition of Cephalon after agreeing to divest Cephalon’s marketing rights in France for a generic version of narcolepsy drug Provigil.

AstraZeneca Plc last year partly lost an appeal at the EU’s second-highest court over a commission decision that it had misled patent officials and flouted antitrust rules to keep a generic competitor off the market. The London-based company has an appeal pending.

--With assistance from Simeon Bennett in Geneva and Allison Connolly in Frankfurt. Editors: Peter Chapman, Jerrold Colten

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

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


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