European Commission Finds “Pay For Delay” Deals On The Decline In Europe But Pharma Sector Antitrust Scrutiny Continues

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On July 6, 2011 the European Commission (Commission) published the

results of its second monitoring exercise of patent settlements in

the pharmaceutical sector (Second Monitoring Report). The Commission notes “with satisfaction” that there is a continued decline in the number of patent settlements it considers to be “potentially problematic” under EU antitrust law. The absolute number of patent settlements increased in relative terms in 2010, showing that the Commission does not prevent companies from settling patent disputes within the boundaries of EU antitrust law. However, ongoing probes at EU and Member State level indicate that the sector will continue to be under the antitrust spotlight.

Background

Companies operating in the EU pharmaceutical sector will be familiar with the Commission’s sustained interest in their business which reached a highwater mark with an 18-month sector inquiry and final report in July 2009 (Final Report). However, the sector inquiry provided only a limited indication of which patent settlements would invite antitrust scrutiny in the EU. In relation to patent settlements, the Final Report stated:

“Agreements that are designed to keep competitors out of the market may also run afoul of [EU] competition law. Settlement agreements that limit generic entry and include a value transfer from an originator company to one or more generic companies are an example of such potentially anticompetitive agreements, in particular where the motive of the agreement is the sharing of profits via payments from originator to generic companies to the detriment of patients and public health budgets.

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