European Commission’s Second Report on Patent Settlements in the Pharmaceutical Sector in the EU

July 6, 2011

On July 6, 2011, the European Commission 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 Commission’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 Commission is careful to point out that at the same time the continuing use of patent settlements shows that neither the sector inquiry nor the monitoring exercise drove companies to litigate patent disputes until the end and that in most cases companies are able to find solutions that are considered unproblematic from a competition law perspective.

The Commission 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.