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EUROPEAN COMMISSION
Joaquín Almunia
Vice President of the European Commission responsible for Competition Policy
Fentanyl case
Statement on EbS, Strasbourg
10 December 2013
SPEECH/13/1053
Today the Commission adopted a decision against two pharmaceutical companies,
Johnson & Johnson and Novartis, and imposed fines totalling 16 million euros. These
companies entered into an anticompetitive agreement to delay the market entry of a
generic version of the pain-killer Fentanyl.
Fentanyl is a pain-killer produced and sold by Johnson & Johnson that is 100 times more
potent than morphine. Fentanyl was originally developed in the 60's. It is applied as a
patch to the skin. Doctors prescribe it notably to cancer patients to relieve them from
severe pain.
In 2005, one Dutch subsidiary of Novartis was preparing to sell its own generic version
of fentanyl, which was no longer protected in the Netherlands. The company had
produced the packaging material, obtained the necessary authorisations, and was about
to launch its product.
However, rather than competing against each other, the companies struck a deal:
Novartis would abstain from entering the Dutch market in exchange for – and here I
quote from internal documents – "a part of [Johnson & Johnson's] cake". The aim of the
deal was – I quote again – "not to have a generic on the market and in that way to keep
the high current price".
So, in July 2005, instead of actually starting to sell the generic version, Novartis
concluded a so-called "co-promotion agreement" with Johnson & Johnson. The
agreement gave Novartis strong incentives not to enter the market.
Under the pretext of "co-promotion" Johnson & Johnson would make monthly payments
to Novartis for as long as there was no generic on the market. But Novartis did very little
or nothing at all to promote the drug. Clearly, Johnson & Johnson was paying its
competitor to keep the generic out of the market. Indeed, those payments exceeded the
profits that Novartis expected to obtain from the generic product. The deal was
terminated in December 2006 because of the imminent launch of a generic fentanyl
patch by another company. This shows that the agreement was not about marketing,
but about sharing monopoly profits.
In sum, for seventeen months, Dutch patients who needed this powerful pain-killer had
to pay an artificially high price for it – probably more than 30% higher. Part of the extra
charge was also borne by the national health system, in other words by taxpayers.
Such practices are simply intolerable. They breach EU competition rules and the
Commission will keep fighting them.
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Indeed, competition in the pharmaceutical sector brings huge benefits to patients and to
welfare systems. Competition by generic medicines, in particular, gives access to the
same treatment at a much lower cost. This is of particular significance today when public
budgets are under strain. In fact, pharmaceutical expenditure absorbs an important
share of the budgets of both states and households.
In this context, generics make a key contribution to ensuring affordable access to
healthcare for all European citizens. These medicines are cheaper for patients, and they
also help Member States to preserve an inclusive and sustainable welfare state.
In addition to that, competition by generics, gives an incentive to pharmaceutical
companies to invest in R&D and develop new original medicines.
Last June, I announced the decision by the Commission to impose fines totalling 145
million euros on Lundbeck and other pharmaceutical companies. The agreements we
sanctioned delayed the market entry of generic citalopram, a blockbuster
antidepressant.
That case 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.
Today's decision is yet another warning that these so-called "pay for delay" agreements
are illegal in the European Union. Companies across the sector should think twice before
entering into deals of this type, as they will be pursued and eventually sanctioned
through the enforcement of antitrust rules.
To conclude, let me briefly mention that we have cases in the pipeline which we are
actively investigating. In 2012, we sent a Statement of Objections to Servier and several
generic companies concerning the cardio-vascular medicine perindopril. We are also
investigating Cephalon and Teva concerning modafinil, a drug used to treat sleeping
disorders.
Preserving competition in the pharmaceutical sector makes a real difference to people's
lives. This is why antitrust enforcement in the pharmaceutical sector is a top priority for
me.
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