On 11 December 2013, the European Commission (“Commission”) sanctioned pharmaceutical firms Johnson & Johnson and Novartis with fines totaling EUR 16.3 million over a co-promotion agreement which allegedly delayed the sale of generic versions of pain killer Fentanyl in the Netherlands.
Johnson & Johnson initially developed and commercialised Fentanyl in the 1960s. In the Netherlands, patent protection for the Fentanyl depot patch expired in 2005 and Sandoz (a subsidiary of Novartis) was on the verge of launching its generic fentanyl patch. According to the Commission, it had already purchased packaging material and obtained market authorizations.
But eventually, Sandoz did not enter the market. Instead, it concluded a co-promotion agreement with Janssen-Cilag (a subsidiary of Johnson & Johnson). The Commission considered that co-promotion was merely a pretext and that the agreement actually aimed to discourage Sandoz from entering the market. In support of this conclusion, the Commission cites incriminating references in internal documents and also alleges that (i) Johnson & Johnson’s relevant patents had already expired; (ii) the agreement involved monthly payments to Sandoz exceeding the profits that Sandoz expected from generic entry; (iii) the agreement was terminated when a third party was about to launch generic fentanyl; and (iv) Sandoz hardly engaged in any co-promotion activities.
This is the second pay-for-delay case for the Commission, after the Lundbeck decision adopted in June 2013 (see our post here). Commissioner Almunia noted in a statement that “[Lundbeck] involved a so-called ‘patent settlement’, in contrast to today’s decision which does not relate in any way to intellectual property matters. However, in both cases the logic is the same: a company was paying its competitor to delay the entry on the market of the generic version of its drug”. Going forward, Commissioner Almunia reminded that the enforcement of antitrust rules in the pharma sector remains a “top priority”. The Commission is currently scrutinizing two more pay-for-delay cases: Servier and Cephalon/ Teva.