Commission to study patents in drugs anti-trust investigation

The Commission is taking further action in investigating if there have been deals to keep generic drugs off the market, with a request to certain pharmaceutical companies asking them to submit copies of patent settlement agreements.

It is looking for settlements where the original developer and patent holder on a drug has paid generic competitors to delay the launch of a generic drug once the patent has expired. The requests cover patent settlement agreements concluded between originator and generic pharmaceutical companies from 1 July 2008 to 31 December 2009.

The Commission said in a statement that this “monitoring exercise” has been launched in the light of the findings of the competition inquiry into the pharmaceutical sector, published in July 2009. (IP/09/1098 and MEMO/09/321).

Commissioner Neelie Kroes said the inquiry had pointed to significant shortcomings in the pharmaceutical sector. “Patent settlements are an area of concern, not least if there are situations where an originator company pays off a generic competitor in return for delayed market entry. We need to monitor this type of agreement in order to better understand why, by whom and under which conditions they are concluded.” Kroes said the monitoring process would allow the Commission to take action if necessary.

Since completing the sector inquiry, the Commission has launched a number of new antitrust investigations, the most recent last week against the Danish firm Lundbeck.

Gareth Williams, a Partner at Marks & Clerk, an intellectual property law firm in London, said the investigation is a logical step in progressing the Commission’s bid to find out if there are unnecessary, anti-competitive delays in generic drug manufacture. “There can often be as much commercial incentive for generic companies to restrict competition as there is for major pharmaceutical companies,” he said.

Williams added that the existence of a settlement is not in itself evidence of collusion. “Patent settlements can represent a perfectly reasonable and commercial response to the threat of patent infringement litigation, or challenges to patent validity. Without them, pharmaceutical firms may have no option but to become involved in costly litigation to protect their essential patents, which would in turn result in costs being passed on to consumers.”