Patent settlements are up and anti-competitive behaviour is down: EU

Patent settlements are up and anti-competitive settlement behaviour is down in the European Union.

The European Commission recently released a report on patent settlement agreements between originator and generic companies in the European pharmaceutical sector which shows a continued low level (7% in 2012) of potentially anti-competitive settlements. The report is the fourth of its kind since the Commission’s competition inquiry in the pharmaceutical sector which concluded in July 2009 (see IP/09/1098 and MEMO/09/321), and draws upon the patent settlement agreement results of 53 originator and 66 generic companies.

For those who like statistics, here is a breakdown of the key observations of the report:

  • 183 patent settlement agreements were concluded in 2012, compared to 120 in 2011. However, 58 of those new settlements were due to Portugal’s new laws which provide for immediate settlement where intellectual property rights are uncontested, meaning the actual figure is a slight increase at 125 settlements;
  • 43% of total settlements (or 61% when you exclude Portugal’s figures) did not limit generic market entry at all, so the generic company was free to market its own generic product. 47% of those also included a value transfer (e.g some kind of money payment) from the originator;
  • 51% of total settlements (or 30% excluding Portugal) limited generic market entry but did not show a value transfer from originator to generic company; and
  • only 7% of total settlements (or 10% not including Portugal) limited generic market entry and showed a value transfer from originator to generic company, which represents a continued decrease since 2000. These settlements can be potentially anti-competitive, as they may lead to a delay of generic entry or the imposition of restrictions beyond the exclusionary zone of the patent in return for payment by the originator company.

The report tells of a good market outcome for the Commission, whose competition concerns seemed to not have deterred pharmaceutical companies from settling their disputes in line with the EU’s antitrust rules.

The Commission said that it may decide to continue this monitoring exercise in the future.