The monitoring of patent settlements (4th report)

January 2014

On the 9 December 2013, the European Commission published its report on the monitoring of patent settlements concerning the period from January to December 2012. The intention of the European Commission is to continue the monitoring of patent settlements between originator and generic companies, and to identify those settlements that delay generic market entry to the detriment of the European consumer, possibly in violation of European competition law.

According to the 4th monitoring exercise undertaken by the Commission, 183 patent settlement agreements were concluded in the EEA between 1 January 2012 and 31 December 2012. Therefore, the present exercise has confirmed the increasing use of patent settlements in the European pharmaceutical sector. The results show that the Commission's announcement that it would continue scrutinizing this kind of settlement in the future has not hindered companies from concluding settlements in general.

Percentage sign Nevertheless, the number of settlements which restrict generic entry and show a value transfer from the originator to the generic company, and which might attract competition law scrutiny, have stabilized at a low level according to the report. In the period covered by the sector inquiry (1 January 2000 to 30 June 2008), such settlements represented 22% of all settlements reported, or five settlements per year on average. This percentage has decreased steadily over the years to reach 7% in the period of the current exercise.

Meanwhile, the European Commission published a press release (IP/13/1233) on 10 December 2013 concerning fines for Johnson & Johnson and Novartis for delaying the market entry of the generic pain-killer fentanyl. According to the European Commission, the undertakings constituted an anticompetitive agreement to delay the market entry of a cheaper generic version of fentanyl in the Netherlands, in July 2005. The European Commission concluded that the object of this agreement was anticompetitive and infringed Article 101 of the Treaty on the functioning of the European Union. The European Commission therefore has now imposed fines of € 10.798.000 on Johnson & Johnson (J&J) and € 5.493.000 on Novartis.

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