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The EU Commission suspects the US-pharmaceuticals company Johnson & Johnson and the Swiss-based Novartis of having entered a deal to hamper the introduction of a generic painkiller into the market.
The EU Commission accuses Johnson & Johnson of having paid Novartis for delaying the market entry of its generic painkiller Fentanyl in the Netherlands.
Fentanyl is used as an intravenous drug in anasthesia and as a transdermal patch in chronic pain treatment. Fentanyl is approximately 100 times more potent than morphine.
The EU body now wants to find out whether contractual agreements between Johnson & Johnson and Novartis may have had the "object or effect of hindering the entry" of the generic drug onto the Dutch market.
"Paying a competitor to stay out of the market is a restriction of competition that the commission will not tolerate," EU Competition Commissioner Joaquin Almunia said in a statement.
No proof of wrong-doing
EU competition commissioner Joaquin Almunia suspects laws were broken
At the same time, Almunia stressed that the opening of proceedings did not constitute proof of any violation of EU antitrust legislation. It did mean, however, that "the Commission will deal with the case as a matter of priority," Almunia said.
But there is no stated time period in which the Commission will come to a decision.
Should the Commission's suspicion be confirmed, both companies could face a fine of up to 10 percent of their revenue. EU competition legislation bans practices that restrict competition, like price-fixing agreements and agreements to share markets.
Stefan Gijssels, spokesperson for Janssen Pharmaceutica, the Johnson & Johnson subsidiary involved, told Deutsche Welle he could not provide further information, but did confirm that the investigation focused on contractual agreements with Novartis subsidiaries Hexal and Sandoz concerning fentanyl patches in the Netherlands between 2005 and 2006.
Inquiry found shortcomings
Former EU commissioner Neelie Kroes found generic market entry to be delayed
In 2009, then EU Competition Commissioner Neelie Kroes had pledged to intensify scrutiny of the pharmaceutical sector, including monitoring of settlements between originator and generic drug companies.
An inquiry into the pharmaceutical sector in 2008 and 2009 had found that citizens waited more than seven months after patent expiry for cheaper generic medicines to be introduced. The inquiry also showed that the companies originally producing a given drug used a variety of instruments to delay generic entry for as long as possible in order to to extend the commercial life of their products.
The European Federation of Pharmaceutical Industries and Associations refuted these findings in a report, arguing that in introducing generics into the market there were "regulatory and commercial challenges involved" and that patent holding drug companies were not deliberately delaying market entry of generics.
Author: Andrea Rönsberg
Editor: Ben Knight