On 17 January 2011, the European Commission announced that it has launched another round of its monitoring of patent settlement agreements between pharmaceutical companies. This is the second monitoring exercise following the Commission’s pharmaceutical sector inquiry in 2009. A similar monitoring exercise was conducted in 2010.

On 8 July 2009, the Commission published the final report on its pharmaceutical sector inquiry (see our previous Law-Now on this) which suggested that certain types of patent settlement may have negative competition effects.

The Commission decided to conduct further focused monitoring of patent settlements. In January 2010, the Commission began the first monitoring exercise, sending requests for information to both originator and generic companies, asking for copies of all patent settlement agreements relevant for the EU/EEA markets and concluded between 1 July 2008 and 31 December 2009.

On 5 July 2010, the Commission published a report of its conclusions on this first monitoring exercise. The Commission examined 93 patent settlement agreements entered into by 31 originator companies and 45 generic companies during the relevant period. It found that more settlement agreements had been entered into, but that fewer competition problems had arisen. There was also a significant decrease in the financial value of the agreements from over €200 million in the sector inquiry period to less than €1 million. The Commission noted that the results of the exercise demonstrated an increased awareness of how settlement agreements could adversely affect competition. However, it also commented that it intended to continue monitoring the sector.

The Commission has now confirmed that it has launched a second round of monitoring. It has asked a number of originator and generic companies to provide copies of all patent settlement agreements entered into between 1 January 2010 and 31 December 2010. The Commission hopes to provide a report providing a statistical overview in the first half of 2011. If a specific settlement agreement raises additional questions, it may send more targeted requests for information.

The Commission has stated that it considers this second monitoring exercise to be important to assess whether the positive trend identified in the first monitoring exercise is confirmed and to identify potentially problematic patent settlements.

Comment

Since completing the sector inquiry, the Commission has opened two formal investigations procedures into pharmaceutical companies: Servier and a number of generic pharmaceutical companies in July 2008 in relation to suspected breaches of Articles 101 and 102 TFEU; and Lundbeck in January 2010 also in relation to suspected breaches of Articles 101 and 102 TFEU. The Commission has also conducted a number of dawn raids at the premises of pharmaceutical companies, most recently in November 2010, in relation to suspected joint action to delay generic entry. This serves to confirm that the pharmaceutical sector remains an area under intense scrutiny from the Commission.