European Commission welcomes reduction in ‘potentially problematic’ patent settlements

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A European Commission (EC) report on the monitoring of patent settlements has found that the number of patent settlements in the pharmaceutical sector that are ‘potentially problematic’ under the EU’s antitrust rules fell to 10% of total patent settlements in the sector in the period July 2008 to December 2009 compared with 22% in the period covered in last year's inquiry (January 2000–June 2008).

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The EC asked 41 originator and 45 generic companies to submit copies of their patent settlement agreements relevant for the EU/EEA markets, in order to better understand the use of patent settlements in the EU and to help identify those that might need further scrutiny.

The survey discovered that 93 patent settlement agreements were concluded between originator and generic companies during the 18 months covered by the survey. This compares with 207 agreements concluded during the 7.5 years covered by the sector inquiry (January 2000–June 2008).

The report also shows that the amount of money involved in settlements, between originator and generic companies has decreased from more than Euros 200 million (January 2000–June 2008) to less than Euros 1 million (July 2008–December 2009).

‘Problematic settlements’ were defined by the EC as those that limit generic entry and foresee a value transfer (either direct or by commercial advantage) from an originator to a generic company. The EC also includes as ‘problematic’ agreements that grant protection against generic entry outside the time, product or geographic scope of the patent.

That cheaper generic drugs are not being delayed or kept out of the market is good news for consumers. At the same time, the report concludes that the overall number of patent settlements (which has increased) shows that increased scrutiny by the EC has not hindered out-of-court settlement of litigation.

The EC intends to repeat the monitoring exercise in 2011.

Reference:

Europa Press Release Rapid, Antitrust: Commission welcomes decrease of potentially problematic patent settlements in EU pharma sector, 05 July 2010

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