Problematic patent settlements fall

The number of patent settlements in the pharmaceutical sector that are potentially problematic under the European Union’s antitrust rules fell to 10 per cent of total patent settlements in the period July 2008 to December 2009, it has emerged.
This compared with 22 per cent in the period covered in last year’s inquiry into the pharmaceutical sector.

The amount of money involved in the settlements, between the so-called ‘originator’ pharmaceutical companies and producers of generic drugs, also appears to have decreased, from more than €200 million recorded in the sector inquiry period to less than €1 million in the more recent period, according to a new European Commission report on the monitoring of patent settlements.
Last week (July 5), the Commission adopted a new report on the monitoring of patent settlements in the sector. The monitoring exercise was launched in January and collected data on settlement agreements between originator companies and generic firms for the period from July 1, 2008 to December 31, 2009. It follows the Commission’s competition inquiry into the pharmaceutical sector concluded in July 2009.
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 to June 2008).
However, the number of settlements that may be problematic from a competition perspective decreased significantly in importance and number. In the period of the inquiry, such settlements accounted for 45 out of 207 (22 per cent) of the settlements reported.
By contrast, in the period July 2008 to the end 2009, just 9 out of 93 (10 per cent) of the settlements fell into the category that might attract scrutiny. The direct value transfers involved also decreased.
The Commission believes it is good news for consumers that cheaper generic drugs are not being unduly kept out or delayed into the market.
At the same time, the overall number of patent settlements shows that the Commission’s heightened scrutiny of the pharmaceutical sector has not hindered out-of-court settlement of litigation.
“Patent settlements are an effective means to end patent-related disputes and litigation. Nobody disputes this. However, some of them may be anticompetitive,” said Joaquín Almunia, Commission Vice President in charge of Competition Policy.
“Our report appears to show the sector’s increased awareness of the potential competition concerns, but the Commission will remain attentive to ensure that the sale of safe, affordable medicines is not delayed by unfair practices. This is all the more important in times of crisis and of serious budgetary constraints.”