Antitrust: Commission launches second monitoring exercise of patent settlements in pharma sector

Antitrust: Commission launches second monitoring exercise of patent settlements in pharma sector

The European Commission has addressed information requests to selected pharmaceutical companies, asking them to submit copies of their patent settlement agreements concluded in the European Economic Area (EEA) in 2010 between originator and generic companies. This is the second monitoring exercise following the Commission's competition sector inquiry of 2009 (see IP/09/1098 and MEMO/09/321) that pointed to significant risks for European consumers stemming from certain types of patent settlements.

"Patent settlements are an area of particular concern because they may delay the market entry of generic medicines. The outcome of our first monitoring exercise showed that potentially problematic agreements had decreased significantly since the Commission's sector inquiry" said Joaquín Almunia, Commission Vice-President in charge of competition policy. "The 2011 monitoring exercise is important to assess whether this positive trend is confirmed and to identify potentially problematic patent settlements."

The Commission has asked a selected number of originator and generic companies to submit a copy of all patent settlement agreements relevant for the EU/EEA markets concluded in the period from 1 January 2010 to 31 December 2010, together with annexes, related agreements and amendments. In order to limit the administrative burden on companies, they were asked for limited additional background information.

The Commission's competition inquiry in the pharmaceutical sector showed that certain patent settlements may cause consumer harm because they delay the market entry of cheaper generic medicines.

The Commission will analyse the agreements submitted in the light of these findings and publish a report providing a statistical overview in the first half of 2011. If a specific settlement raises additional questions, a more targeted request for information could follow.

The Commission carried out a first monitoring exercise in 2010 that showed a significant decrease in the number of potentially problematic patent settlements in the EEA. The number fell to 10% of total patent settlements in the sector in the period July 2008 to December 2009 compared with 22% in the period covered in the inquiry into the pharmaceutical sector (January 2000-June 2008). The amount of money involved in the settlements, between the so-called "originator" pharmaceutical companies and producers of generic drugs also decreased from more than € 200 million recorded in the sector inquiry period to less than € 1 million, according to the 2010 report. This suggested an increased awareness of the industry of which settlement agreements may attract competition law scrutiny. It was also good news for consumers that cheaper generic drugs are not being unduly kept out or delayed into the market. (see IP/10/887).