The number of pharmaceutical patent settlements in the EU restricting generic drug entry and with the originator paying a generic company, also known as pay-for-delay deals, continued to decline, according to the European Commission’s eighth report on patent settlements published Friday.
The report found that in 2016, 27% (29 out of 107) of settlements did not limit generic market entry at all, while 62% (66) limited generic market entry but did not show a value transfer from originator to generic company, and 11% (12) limited generic entry and included a value transfer from the originator to the generic company.
“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,” the report said. From 2000 to 2008, such settlements represented 22% of all settlements reported.
The 107 total patent settlements is slightly down from recent years, but is considerably more than in the years from 2000 to 2008.
Most of the settlements (89% in 2016) fall into categories that raise no need for competition law scrutiny, the report noted.
And of those 11 settlements that fell into the category of limiting generic entry and including a value transfer, the report found that six (50%) foresaw early entry without a license or a distribution agreement, four (34%) combined early entry with a license to the generic company, one (8%) combined early entry with a payment to the generic company to compensate for legal costs, and one (8%) only included a license.
Portugal’s 2011 Law
Since 2011, the commission has found a large number of settlements coming from Portugal, which is likely explained by the implementation of a new law that year. Of the 55 settlements covering Portugal in 2016, 42 were related to this legislation, the report found.
“This law essentially provides that an originator must initiate arbitration proceedings within 30 days of the publication of a marketing authorisation application by a generic company. If they do not comply with this provision, the originators then lose the ability to assert their IP rights,” the report said. “Hence, originators in Portugal are, since 2012, obliged to systematically bring arbitration proceedings against all generics applying for marketing authorisations. Many of these proceedings, where there is no issue on the validity of the underlying rights, are settled very rapidly.”
However, the report noted the difficulty in estimating how many of these settlements in Portugal would also have been concluded without that 2011 law.