On 10 December 2013, the European Commission announced that it has imposed fines of 10.798 million euros on Johnson & Johnson (J&J) (with Janssen-Cilag B.V., jointly and severally) and 5.493 million euros on Novartis (with Sandoz B.V., jointly and severally) in relation to fentanyl.

Background: Fentanyl Decision

In July 2005, the Dutch subsidiaries of J&J and Novartis concluded an agreement to delay market entry of a cheaper generic version of the pain-killer fentanyl in the Netherlands. Fentanyl is a pain-killer that is 100 times more potent than morphine and is used for patients suffering from cancer.

In 2005, J&J’s protection on the fentanyl depot patch had expired in the Netherlands and Novartis’ Dutch subsidiary, Sandoz, was about to launch its generic fentanyl depot patch. It had already produced the necessary packaging material.

However, in July 2005, instead of actually starting to sell its generic version, Sandoz concluded a “co-promotion agreement” with Janssen-Cilag, J&J’s Dutch subsidiary.

The agreement provided incentives for Sandoz not to enter the Dutch market. The agreed monthly payments exceeded the profits that Sandoz had expected to obtain from selling its generic product, for as long as there was no generic entry. Sandoz did not offer its product on the Dutch market. The agreement was stopped in December 2006 when a third party was about to launch a generic fentanyl patch in the Netherlands.

The Commission concluded that the agreement delayed the entry of a cheaper generic medicine for seventeen months and kept prices for fentanyl in the Netherlands artificially.

According to internal documents discovered by the Commission, Sandoz were to abstain from entering the Dutch market in exchange for “a part of [the] cake”. Instead of competing, Janssen-Cilag and Sandoz agreed on cooperation so as “not to have a depot generic on the market and in that way to keep the high current price”.

The Commission therefore concluded that the object of this agreement was anticompetitive. More information on this decision will be available on the EU competition website in the public case register under the case number AT.39685, when confidentiality issues have been addressed.

Overall Background

The Commission is investigating “pay-for-delay” agreements that limit generic entry in return for a value transfer from the originator company to the generic company. Such agreements may be concluded in the context of a potential patent dispute (as in the recent “Lundbeck” decision, briefly mentioned below) or unrelated to any such dispute (as in the present “Fentanyl” decision).

In June 2013, the Commission fined Lundbeck 93.8 million euros and fined several generic companies a total of 52.2 million euros on over pay-for-delay deals relating to the market entry of generic versions of the antidepressant Cipralex (citalopram) (see IP/13/563, in the Commission’s first reverse payment settlement case).

Two other probes are ongoing:

  • Servier and other companies and relates to the potential delay of market entry for generic Aceon (perindopril) (in 2012, the Commission issued a Statement of Objections – see IP/12/835); and
  • Cephalon and Teva and concerns an agreement that may have hindered the market entry of generic Provigil (modafinil) (in 2011, the Commission opened proceedings – see IP/11/511