EU report finds decline in pay-for-delay pharma deals Posted 27/04/2018

The European Commission (EC) published the 8th Report on Monitoring Patent Settlements. It covers the 107 pharmaceutical patent settlements concluded between originator and generic drug companies in 2016 and shows that pay-for-delay settlements continue to decline. Such settlements can contravene antitrust laws with originator manufactures paying-off generics companies to delay generics market entry. Pay-offs can be monetary, but may also include distribution or licensing agreements or restrictions. 

The creation of the eight reports on patent settlements result from a Commission led inquiry into competition within the pharmaceutical sector which concluded in 2009. In follow-up to this, they began their annual monitoring of pharmaceutical companies to assess how they impact the market entry of generics [1-4].

The 8th report shows that, in 2016, only 11% of deals limited generics market entry and involved value transfer from the originator to the generics manufacturer. From 2004 to 2008, such deals represented 22% of all settlements. The Commission also noted that over 90% of the deals made in 2016 do not require competition law scrutiny.

Of the 2016 settlements, the Commission categorized 27% as being without limitation to generics market entry. A further 62% were said to limit generics market entry, but without a transfer of value from the originator to the generics company. Most of the latter settlements were signed in the context Portuguese legislation that came into force in 2011. This has led to increased arbitration proceedings between originator product sponsors and generics companies applying for marketing authorization.

The EC’s results show that their monitoring exercises and scrutinization of value transfer settlements in the pharmaceutical industry has not prevented companies from settling patent disputes.  It also states that the number of generics entry-limiting settlements that involve a transfer of value have now ‘stabilized at a low level’.

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References
1.  GaBI Online - Generics and Biosimilars Initiative. Problematic pharma patent settlements decrease in the EU [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2018 Apr 27]. Available from:  www.gabionline.net/Reports/Problematic-pharma-patent-settlements-decrease-in-the-EU
2. GaBI Online - Generics and Biosimilars Initiative. EU problematic patent settlements remain at low level [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2018 Apr 27]. Available from: www.gabionline.net/Reports/EU-problematic-patent-settlements-remain-at-low-level
3.  GaBI Online - Generics and Biosimilars Initiative. EU problematic patent settlements stabilize [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2018 Apr 27]. Available from: www.gabionline.net/Reports/EU-problematic-patent-settlements-stabilize
4.  GaBI Online - Generics and Biosimilars Initiative. EU investigation tackles pay for delay [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2018 Apr 27]. Available from: www.gabionline.net/Reports/EU-investigation-tackles-pay-for-delay

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