Two Pharma Companies Fined Over 'Pay For Delay'; Novartis Unrepentant About Suffering Caused

from the profits-before-patients dept

Thu, Dec 19th 2013 3:18am — Glyn Moody

Back in April of this year, we wrote about a spate of investigations around the world into "pay for delay" deals, whereby a big pharma company essentially buys off manufacturers of generics so that the former can continue to enjoy monopoly pricing long after its patents have expired. One of those involved the European Union, and the two pharma companies Johnson & Johnson and Novartis. As PharmaTimes reports, fines are being imposed on them for their actions:

The European Commission has fined Johnson & Johnson (J&J) just under 10.8 million euros and Novartis 5.49 million euros, after finding that their subsidiaries in the Netherlands had agreed an anticompetitive deal aimed at delaying the market entry there of a generic version of the painkiller Duragesic (fentanyl), thus breaching European Union (EU) antitrust rules.

Of course, such sums are little more than a wrist slap for pharma giants, but it's nonetheless good to see the European Commission making clear that this anti-competitive behavior is not acceptable in the EU: The payment by J&J to Novartis "shockingly deprived patients in the Netherlands, including people suffering from cancer, from access to a cheaper version of this medicine," said Joaquin Almunia, the European Commission vice president in charge of competitive policy.
Despite that fact, with the likelihood that cancer patients were probably in more pain than was necessary, some remain in denial: In a statement, Novartis and [its subsidiary] Sandoz say they "reject the Commission's allegation that the 2005 co-promotion agreement was intended to deprive patients in the Netherlands of cheaper medicines."
Whether or not that was the "intention", it was the inevitable effect, and quibbling over the difference shows the moral squalor of companies like Novartis that regard additional suffering of cancer patients as some kind collateral damage that can be ignored in the cause of pumping up their profits.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: european commission, fines, netherlands, pay for delay, pharmaceuticals
Companies: johnson and johnson, novartis

25 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Ninja (profile), 19 Dec 2013 @ 2:38am

The fine should be calculated with the sales of the generics prior to the acquisition plus expected growth in sales. It should be to the tune of hundreds of millions or more depending on how long it was allowed to go on. You know what was a good slap? BP paying 10+ BILLIONS (with a B) to compensate for the disaster in the Gulf. This is the kind of penalty a huge company has to take to effectively discourage future bad behavior.
[ link to this | view in thread ]
That One Guy (profile), 19 Dec 2013 @ 3:34am

Re:
How's this for a punishment: any company found to be guilty of this sort of thing is barred from selling in that country's market for a period equal to the duration they artificially kept competing generics off the market.

Alternatively, all of the company's patents in that country are shortened in duration equal to the amount of time the generics were artificially kept from market.
[ link to this | view in thread ]
Anonymous Coward, 19 Dec 2013 @ 3:48am

This is common
See link above regarding Lipitor.

Just because something is off patent...
[ link to this | view in thread ]
Not an Electronic Rodent (profile), 19 Dec 2013 @ 4:12am

Ooooh! Vicious! (not!)
The European Commission has fined Johnson & Johnson (J&J) just under 10.8 million euros and Novartis 5.49 million euros,
Gosh, I'm so impressed. With Johnson & Johnson's net worth around $65BN that 11 million is a real disincentive to stop ripping off consumers and killing people... yes siree, that 0.017% of net worth fine is really gonna show them and make them change their ways....
[ link to this | view in thread ]
justok (profile), 19 Dec 2013 @ 4:22am

I'd expect something like that from Johnson, but never from Johnson.
[ link to this | view in thread ]
Anonymous Howard (profile), 19 Dec 2013 @ 4:31am

Re: Re:
I have another idea:

Let the competing companies sue Novatris over "expected future profits" XD
[ link to this | view in thread ]
Anonymous Coward, 19 Dec 2013 @ 4:32am

If anybody wants to explain to others how perverse those things are maybe watching 116 min movie could help, to put it into perspective.

Wikipedia: Dallas Buyers Club (film)

No I still loath Hollywood.

Still the movie there shows how people will go to great lengths to do what they know it is right, laws or no laws, most people have two good eyes they can see it, they don't need others to explain to them what are they are seeing in most cases. I am talking about the real life here not the movie.
[ link to this | view in thread ]
Anonymous Coward, 19 Dec 2013 @ 4:56am

the European Commission need to be very careful and very watchful now because if the USA/EU deal under TAFTA/TTIP are allowed to come in, the companies will be suing the EU for lost profits by letting generic drugs on to the market!

EU, YOU HAVE BEEN WARNED! KILL THIS TAFTA/TTIP DEAL AND KEEP OUT OF ANY FUTURE ONES WITH THE USA!
[ link to this | view in thread ]
Anonymous Coward, 19 Dec 2013 @ 5:05am

Re: Re: Re:
Yes, this could be the new reality tv series.
Extreme sovereignty - corporate edition
[ link to this | view in thread ]
Anonymous Coward, 19 Dec 2013 @ 5:11am

In Related News
GlaxoSmithKline To Stop Paying Doctors To Promote Drugs
http://www.huffingtonpost.com/2013/12/17/glaxosmithkline-pay-doctors_n_4457286.html

Oh ... you mean we should not have been doing that?
Well. if anyone had told us beforehand ... this was certainly not intentional. We have done nothing wrong.
[ link to this | view in thread ]
Anonymous Coward, 19 Dec 2013 @ 5:18am

What did you expect?
Here in the US those companies have a fiduciary responsibility *by law* to maximize shareholder value. Suppressing cheaper competition fulfills that responsibility, whereas suppressing patients' pain does not.
[ link to this | view in thread ]
Bengie, 19 Dec 2013 @ 5:23am

Re: Ooooh! Vicious! (not!)
Probably tax deductible as a loss.
[ link to this | view in thread ]
Brandon (profile), 19 Dec 2013 @ 5:39am

Re: Re:
The problem with that is in many cases there are no alternatives. If you do that, you end up making sure more patients don't get access to the drug (you suddenly restrict brand) and more people suffer. It's no longer hurting just the people who can't afford/get brand medication - you're hurting the people who were on brand prior to this mess.

I do however like the shortened duration of patents idea. That'll ensure the patients still have access to needed medication but the company will feel the sting of pulling these kinds of things when generics get released by other companies (which in turn would give greater access to patients who couldn't afford/use brand medication).
[ link to this | view in thread ]
Pragmatic, 19 Dec 2013 @ 6:11am

Re: Re:
I have a better idea: ban all patents on drugs, surgical procedure and all things used for medical purposes. Make it all free and open source.
[ link to this | view in thread ]
Anonymous Coward, 19 Dec 2013 @ 6:25am

So, out of curiosity, what was Johnson & Johnson's response to the slap on the wrist?
[ link to this | view in thread ]
Anonymous Coward, 19 Dec 2013 @ 6:38am

Re: What did you expect?
I was only following orders

The devil made me do it

It's not my fault

fiduciary responsibility
[ link to this | view in thread ]
Anonymous Coward, 19 Dec 2013 @ 6:39am

Re:
another write off
[ link to this | view in thread ]
Anonymous Howard (profile), 19 Dec 2013 @ 6:53am

Re:
They have an unguent for the sting, and enough money not to care.
[ link to this | view in thread ]
DannyB (profile), 19 Dec 2013 @ 7:49am

Re: Re: Re:
I have a better idea: ban all patents.
[ link to this | view in thread ]
Anonymous Coward, 19 Dec 2013 @ 8:07am

Patents are getting in the way of "public safety". We always hear about public officials spouting, "we're doing this or that (spying on you) for your own safety and the safety of the public."

Seeing as patents are getting in the way of public safety, it appears time for them to go the way of the Dodo Bird.

Unless of course, public officials could care less about "public safety" when profits are involved.

At least the EU Commission seems to care a little bit about "public safety". I doubt anything would have been done about this if it happened in morally corrupt America.

Isn't Johnson and Johnson a "Family owned American Company"? For shame.
[ link to this | view in thread ]
FM Hilton, 19 Dec 2013 @ 4:14pm

Big Pharma laughed at this
Sure, they got fined millions of dollars for doing the 'pay for delay' in the EU countries.

I rather doubt it will happen here, as the FDA is a compliant and toothless wonder when it comes to Big Pharma. They'll allow anything on the market-literally, without all that pesky drug testing that is supposed to go with it. They've been accused of allowing many drugs on the market to be released with shoddy testing behind them, only to find that the drug makers themselves were rigging the system.

How many people have been harmed by this? I don't even want to know-but I'm sure it's in the thousands.

Until the FDA does something more substantial than pat them on the back for not getting caught at releasing dangerous drugs, Big Pharma will continue to do so.
[ link to this | view in thread ]
Anonymous Coward, 19 Dec 2013 @ 8:15pm

"...the former can continue to enjoy monopoly pricing long after its patents have expired."

I can only speak to the US (not Europe), and within the US the above comment is incorrect. The generic manufacturer who has entered into one of these arrangements is absolutely permitted to engage in the generic market on the very day that the patent expires. The patent now being past tense, the patent holder is now a former patent holder.
[ link to this | view in thread ]
Anonymous Coward, 20 Dec 2013 @ 5:56am

Re:
Maybe you misunderstood the story.

Just because legally the generic manufacturer is not bound by a patent, doesn't stop the former patent holder keeping hold of the market. See Lipitor related link in post above entitled "this is common".
[ link to this | view in thread ]
Paul Renault (profile), 21 Dec 2013 @ 4:45am

Re:
If, according to just about every 'free trade' agreement/proposal of the last twenty years, a corporation can sue governments for 'lost profits' when their business plans are blocked by, say, a country's constitution, then the generics must be even more able to sue for 'lost profits.

Obvious, no?
[ link to this | view in thread ]
The Wanderer (profile), 6 Jan 2014 @ 6:23pm

Re: Re: Re:
The problem with that is in many cases there are no alternatives. If you do that, you end up making sure more patients don't get access to the drug (you suddenly restrict brand) and more people suffer. It's no longer hurting just the people who can't afford/get brand medication - you're hurting the people who were on brand prior to this mess.

If the generic version is exactly equivalent (which I believe is the idea), then how is that a problem? The people who were on the more expensive form can just switch to the cheaper generic, and proceed without issues.
[ link to this | view in thread ]