The European Commission’s fifth patent settlement monitoring report was published on 5 December 2014. The Commission started monitoring patent settlements between originator and generic companies following the publication of its report into the EU pharmaceutical sector in 2009.
The Commission’s stated aims as regards the monitoring exercise are ‘to better understand the use and type of agreement and to identify those agreements that delay generic entry to the detriment of the European consumer possibly in violation of EU competition law’. The ifth report comes against a backdrop of continuing enforcement activity on this theme, most recently the prohibition decisions adopted in the Lundbeck and Servier cases (2013 and 2014 respectively), where the Commission concluded that so-called ‘reverse-payment settlements,’ that is, settlements containing restrictions on generic entry and involving a ‘value transfer’ from the originator company to the generic irm, are restrictions of competition by object.
The Commission’s views on pay-for-delay cases have always been strongly contested. There is a widespread belief that few patent settlement agreements, even if they involve value transfers and could be called ‘pay-for-delay’ agreements, have true anti-competitive effect. Some may be the reasonable result of a genuine patent dispute and will not leave anti-competitive impacts on the market, e.g. because they may avoid protracted litigation which could itself signiicantly delay generic entry. For this reason, many pharmaceutical suppliers and other parties believe that it is a fallacy to conclude that pay-for-delay agreements should be considered infringements of the competition rules by object and that the authorities should indeed consider the individual circumstances of each case.