European Commission report shows decline in "pay-for-delay" generic drug deals

The European Commission said Monday that the number of "pay-for-delay" patent settlement agreements surrounding generic drugs has fallen since the regulator launched an inquiry into the practice in 2008. Joaquín Almunia, commission vice president in charge of competition policy, remarked "our fourth monitoring report shows that companies are increasingly aware of the competition concerns that some settlements may raise."

The Commission indicated that patent settlement deals that included a value transfer between companies stood at 22 percent in the period from 2000 to the first half of 2008, falling to 7 percent for settlements concluded in 2012. However, the regulator noted that the total number of settlements has increased steadily, as 183 such deals were reached in 2012, compared to 120 in 2011. The Commission explained that the large increase in settlements was partly attributable to new legal provisions in Portugal designed to increase generic drug use in the country.

According to the Commission, excluding the settlements reached in Portugal, the report found that the total number of patent settlement deals was 125 in 2012, marking the fifth consecutive year in which the total number of such agreements increased. Almunia commented that the report "demonstrates that the Commission's action has not prevented companies from settling patent disputes in line with the antitrust rules."

The Commission indicated that it has launched three formal antitrust proceedings concerning patent settlements, and earlier this year fined Lundbeck and eight other drugmaker a total of 146 million euros ($200 million) over agreements to delay the launch of generic versions of the antidepressant Celexa (citalopram). The regulator is also investigating several companies, including Servier, over practices it says may have delayed the launch of generic versions of Coversyl (perindopril), while another probe focuses on Teva and its Cephalon unit concerning a deal that may have hindered the entry of generic Provigil(modafinil).

Sources suggested last month that the European body was also likely to fine Johnson & Johnson and Novartis for preventing the sale of generic versions of fentanyl in the Netherlands.

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