Out-Law News 1 min. read
11 Dec 2013, 2:45 pm
So-called 'pay to delay' arrangements are usually concluded in the context of the settlement of patent litigation and involve a payment or other value transfer from an originator drug company to a generic company in return for the generic not entering the market.
The Commission has conducted its annual research into the patent settlement agreements reached between pharmaceutical originator and generic companies. In its latest report the Commission has found that the number of patent settlement agreements has increased, but the number of agreements involving a 'value transfer' from originator companies to generic drug-producing rivals has fallen.
The report shows that there were 183 patent settlement agreements between January and December 2012, compared to 120 in 2011. This was a significant increase from previous years, partly explained by the introduction of new legal provisions in Portugal. Even leaving those aside, there is a slight increase from 120 in 2011 to 125 in 2012, making 2012 the fifth year in a row where the total number of settlements increased.
Agreements involving "payments" represented 7% of the total number, which is down from 11% in 2011 and down from 22% in the period from 2000 to the first half of 2008.
The results are documented in the Commission's fourth report on patent settlement agreements concluded between originator and generic companies in the pharmaceutical sector (19 page / 449KB PDF).
The Commission's report said that settlements involving payments would "attract the highest degree of antitrust scrutiny since they limit access to the market and contain a value transfer from the originator to the generic", but that "this is not to suggest that agreements falling into this category would always be incompatible with EU competition law".
The fines and type of cases being pursued by the Commission in this area suggest, though, that by their very nature, these types of agreements will carry a far greater risk for companies.
The European Commission has fined several pharmaceutical companies for breaches of EU competition law in respect of 'pay for delay' agreements. Yesterday it announced fines of €10.8 million for US pharmaceutical company Johnson & Johnson (J&J) and €5.5m for Novartis of Switzerland.