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European Commission investigates Johnson & Johnson and Novartis over delaying generics Posted 28/10/2011

As part of its ongoing antitrust investigations, the European Commission (EC) announced on 21 October 2011 that it is looking into agreements between Johnson & Johnson (J&J) and Novartis to determine whether they delayed the entry of a generic version of the fentanyl painkiller in The Netherlands. If the drugmakers had ‘contractual arrangements’ that hindered a generic drug, this would ‘potentially’ breach EU antitrust rules.

Sandoz—the generic drugs unit of Novartis—sells low-cost generics in markets where J&J’s patents on fentanyl have expired. J&J’s Duragesic (fentanyl) painkiller patch is used in the treatment of chronic and often cancer pain.

The EC has been investigating so-called pay-to-delay deals over the past years as part of its pharmaceutical sector inquiries and has in fact found that the number of ‘problematic settlements’ has been falling. In its last monitoring exercise of the sector it found that only 3% of patent settlements between brand-name and generics manufacturers fell into the category that might attract scrutiny by the EC’s antitrust commission [1].

The EC has previously said that it ‘will remain vigilant that companies’ behaviour respect antitrust law and do not delay entry of cheaper pharmaceuticals’.

Commenting on the current investigation, Mr Joaquín Almunia, Vice President of the Commission in charge of competition policy said ‘I regard this sector as a priority in terms of enforcement of competition rules given its importance for consumers and for governments’ finances.’ He added ‘pharmaceutical companies are already rewarded for their innovation efforts by the patents they are granted. Paying a competitor to stay out of the market is a restriction of competition that the Commission will not tolerate.’

A J&J spokesman told The Wall Street Journal ‘we had a contractual agreement with Sandoz in 2005 and 2006 with regards to fentanyl patches in The Netherlands. Whether or not that infringes competition rules, that is something that will be the object of the investigation.’

Europe is not the only place focussing on pay-to-delay deals the US Federal Trade Commission (FTC) has been lobbying for years for legislation to be passed banning such deals. The FTC claims that passing legislation to restrict pay-for-delay deals between brand-name and generic drugmakers will save US consumers billions of dollars. According to FTC economists these deals cost consumers about US$3.5 billion a year by delaying consumers’ access to lower cost generic drugs [2].

However, Mr Ralph G Neas, GPhA (US Generic Pharmaceutical Association) President and CEO, commented that ‘a ban on patent settlements would have the unintended consequence of delaying patient access to lower cost generics, costing consumers, payers and the government billions of dollars’. GPhA has carried out an analysis which points to the savings delivered by generics which have entered the market before the patents on their brand-name equivalents expired thanks to patent litigation settlements between generic and brand-name companies [3].

Editor’s comment
So the jury is still out on whether these deals delay or not? There are conflicting reports out there. One thing most people can agree on though is that affordable medicines should be available as soon as possible. But what is the best way to make this happen?

Please feel free to share your thoughts via email to editorial@gabionline.net or in the comments section below. What are your views on the continuing pay-to-delay debate? Should legislation be introduced banning these deals? Or do these deals result in generics being available sooner than would otherwise be possible?

Related articles

EC to investigate patent settlements again

Battle over ‘pay-for-delay’ deals continues

European Commission welcomes reduction in ‘potentially problematic’ patent settlements

References

1. GaBI Online - Generics and Biosimilars Initiative. Problematic patent settlements in EU on the decrease [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2011 October 28]. Available from: www.gabionline.net/Reports/Problematic-patent-settlements-in-EU-on-the-decrease

2. GaBI Online - Generics and Biosimilars Initiative. More debate over pay-to-delay legislation in the US [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2011 October 28]. Available from: www.gabionline.net/Policies-Legislation/More-debate-over-pay-to-delay-legislation-in-the-US

3. GaBI Online - Generics and Biosimilars Initiative. Generics saved US$931 billion over last 10 years [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2011 October 28]. Available from: www.gabionline.net/Generics/Research/Generics-saved-US-931-billion-over-last-10-years

Source: Europa

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