Pharmaceutical Developments; EC Reports on Patent Settlements for the Second
On July 6, 2011, the European Commission (EC) adopted its second report on
the monitoring of patent settlements in the pharmaceutical sector in the EU. The
monitoring exercise collected data on settlement agreements between originator
and generic companies during 2010. The report follows the EC's EU competition
law inquiry into the pharmaceutical sector concluded in July 2009 and the first
monitoring exercise, which covered part of 2008 and 2009.
This second monitoring exercise identified 89 patent settlement agreements in
the EU between originator and generic companies in 2010. This compares with 207
such agreements during the 8.5 years covered by the sector inquiry and 93
agreements during the 18 months covered in the first monitoring exercise. The
report emphasises, however, that the number of settlements potentially
problematic from a competition law point of view – in particular those that
limit generic entry against payment from the originator to the generic company –
decreased significantly more in importance and number.
The EC has indicated that it will continue monitoring the sector to make sure
that settlements are not delaying entry of generics into the market and that
they do not contain other restrictions that would be problematic under EU
competition law. It will repeat the monitoring exercise in 2012.
Pharmaceutical Developments; EC Settles Case Concerning Alleged Patent Misuse
On the same day that it published its second report on monitoring of patent
settlements in the EU, the parties settled a live case that the EC had been
investigating in the area. The case concerned allegations by Spanish
pharmaceutical company, Almirall, that the German pharmaceutical company,
Boehringer Ingelheim (BI), had filed for unmeritorious patents regarding new
treatments of chronic obstructive pulmonary disease (COPD). The EC’s
investigation concerned whether this was an alleged misuse of the patent system
in order to exclude potential competition in the area of COPD, in breach of EU
competition law rules.
Under the settlement agreement, the alleged blocking positions will be
removed for Europe, a licence will be granted for two countries outside Europe
and pending litigation between the parties will be ended. Almirall will
therefore be able to launch its competing medicines after obtaining marketing
authorisation from the competent bodies.
The case is interesting generally as it provides an example of the EC taking
a pragmatic approach to the investigation (it had suggested that the parties
reach a commercial settlement) and as it provides another example of the EC’s
focus on the pharmaceutical industry, in particular the need to increase
competition in relation to medicines.
UK Office of Fair Trading Publishes Competition Compliance Guidance for
Following a consultation carried out last year by the UK Office of Fair
Trading (OFT) on competition law compliance guidance for companies and
directors, the OFT published on June 27, 2011 the final versions of its guidance
The two principal documents published by the OFT are worth reading in detail.
The OFT expects to see active engagement by directors. It comments that a
director with overall responsibility for a business area (but not immediate
management responsibility over individuals responsible for an infringement)
should make "reasonable enquiries" so as to seek to identify competition law
breaches (presumably on a fairly regular basis). Non-executive directors
similarly should make "reasonable enquiries" of the executive directors so as to
satisfy themselves that the executive directors have, amongst other things,
"taken appropriate steps to identify and assess the company's exposure to
competition law risks".
Although these materials relate specifically to the UK, they represent best
practice in the EU in the area of competition law compliance.
Additional EU/UK competition law news coverage can be found in our
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