European Commission welcomes continued low level of potentially problematic patent settlements in EU pharma sector

09 Dec, 2013

The European Commission’s report on patent settlement agreements concluded between originator and generic companies in the pharmaceutical sector in 2012 shows that the number of settlements that may give rise to antitrust concerns is continuously low. This shows the industry’s increased awareness of potentially problematic practices. As such settlements may delay the market entry of cheaper generic medicines, this is good news for consumers and taxpayers. The report also finds that the overall number of patent settlements has increased as compared to the previous monitoring periods. This demonstrates that companies can successfully settle their disputes within the boundaries of the EU antitrust rules.

Commission Vice President in charge of competition policy Joaquín Almunia commented: “Our fourth monitoring report shows that companies are increasingly aware of the competition concerns that some settlements may raise. It also demonstrates that the Commission’s action has not prevented companies from settling patent disputes in line with the antitrust rules.”

The 2013 survey unearthed that 183 patent settlement agreements were concluded between originator and generic companies between January and December 2012, as compared to a total of 120 in 2011. This significant increase is partly explained by the introduction of new legal provisions in Portugal. Even leaving those aside, there is a slight increase from 120 in 2011 to 125 in 2012, making 2012 the fifth year in a row where the total number of settlements increased.

The Commission’s 2009 competition inquiry in the pharmaceutical sector identified settlements that limit generic entry and provide at the same time for a value transfer from the originator to the generic company as the most likely to raise competition concerns. This type of settlements has now decreased significantly in importance and number. While they accounted for 45 out of 207 (or 22%) of all settlements reported between 2000 and the first half of 2008 they stood at only 7% (or 12 out of 183) of all settlements concluded in 2012.

At the same time, the overall number of settlements has steadily increased. This shows that the Commission’s antitrust action has not hindered companies in settling patent disputes nor driven them to litigate such disputes until the end. Indeed, in most cases companies are able to find solutions that are unproblematic under EU antitrust rules.

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