The European Commission continues to scrutinize the pharmaceutical sector and patent settlement agreements between innovator and generic pharmaceutical companies. This follows the European Commission’s July 2009 Pharmaceutical Sector Inquiry Report which was focused on the behaviour and practices of the “originator industry” which were alleged to have cause undue delays in generic market entry and innovation.

The Report appears to have prompted legal proceedings against pharmaceutical companies such as Servier and Lundbeck and the European Commission has recently sent “requests for information” to a number of other pharmaceutical companies seeking copies of patent settlement agreements conducted between innovator and generic companies executed in the last 18 months. Further, a number of unannounced inspections targeting the legal departments of many large pharmaceutical companies of were conducted in late 2009.

In addition to patent settlement agreements, the Commission’s Report notes concerns relating to 'defensive' patents and regulatory complaint strategies. In light of this recent scrutiny and uncertainty, pharmaceutical companies are being encouraged to conduct appropriate due diligence on all patent settlement agreements between generic and innovator companies.

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