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European Commission - Press release

Antitrust: Commission welcomes new decrease in problematic pharma patent settlements in the EU

Brussels, 6 July 2011 - The European Commission's second monitoring exercise of patent settlements in the pharmaceutical sector shows a continuing decline of settlements potentially problematic under EU antitrust rules. This highlights an increased awareness of so-called originator and generic companies of which types of settlements can give rise to antitrust scrutiny – generally the so-called pay-for-delay settlements - and is good news for consumers who will benefit from cheaper pharmaceuticals. The number of patent settlements increased in 2010, however, showing that the Commission's vigilance does not prevent firms from settling disputes successfully within the boundaries of the EU rules.

"I note with satisfaction that the number of patent settlements potentially problematic under EU antitrust law continues to decrease without calling into account companies' legitimate right to settle disputes amicably. The Commission will remain vigilant that companies' behaviour respect antitrust law and do not delay entry of cheaper pharmaceuticals," said Joaquín Almunia, Commission Vice President in charge of competition policy.

The second monitoring exercise identified 89 patent settlement agreements between originator and generic companies in 2010. This compares with 207 such agreements during the 8.5 years covered by the sector inquiry concluded in July 2009 (see IP/09/1098 and MEMO/09/321). It also compares with 93 agreements during the 18 months covered in the first monitoring exercise (see IP/10/887).

However, the number of settlements potentially problematic from an antitrust perspective – in particular those that limit generic entry against payment from the originator to the generic company - decreased significantly more in importance and number. In the period covered by the sector inquiry, such settlements accounted for 45 out of 207, or 22 % of the settlements reported. In the first monitoring period the figure dropped to 10% or 9 out of 93 of the settlements. In 2010, only 3% or 3 out of 89 of the settlements fell into the category that might attract scrutiny.

At the same time the 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 were able to find solutions that are usually considered unproblematic from a competition law perspective.

The Commission will repeat the monitoring exercise in 2012.

Separately, the Commission closed an antitrust investigation against Boehringer Ingelheim, following the latter's settlement with its competitor Almirall removing obstacles that could have blocked Almirall (see IP/11/842). The investigation was unrelated to the patent settlement monitoring exercise mentioned above.

Background

Problematic patent settlements are those where typically an originator company pays to delay entry of a generic drug. Cases where the two sides stop litigation without payment and the restrictions are within the scope of the contested patent or patent settlements where the generic company can enter without delay and restrictions are normally not problematic under antitrust law.

The aim of the monitoring exercise was to better understand the use of patent settlements in the EU and to help identifying those that might need further scrutiny. The latter category proved to be small and none of the cases so identified will automatically trigger an in depth antitrust investigation by the Commission. In any event each case has to be assessed on its merits. In cases with a purely national dimension, the Commission may also share certain information with national competition authorities.

So far the Commission has opened three formal proceedings with respect to patent settlements (see MEMO/09/322, IP/10/8 and IP/11/511). The full text of the report is available at:

http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/index.html

Contacts :

Amelia Torres (+32 2 295 46 29)

Marisa Gonzalez Iglesias (+32 2 295 19 25)


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