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Questioned Deals In Europe

Pharmaceuticals: European commission seeks to vet settlements for payoffs to generic drugmakers

by Rick Mullin
January 18, 2010 | A version of this story appeared in Volume 88, Issue 3

Credit: EC
Credit: EC

The European Commission (EC) has asked several pharmaceutical companies to submit the details of patent settlements with generic drugmakers to determine whether payments made to generics firms to delay the introduction of low-priced alternatives to brand-name drugs have hurt consumers.

The inquiry follows a report published by the EC in November 2009 claiming evidence that pharmaceutical companies have engaged in a variety of practices, including payoffs to generics competitors, that diverted as much as $4 billion in savings that would have resulted from timely introduction of generic drugs in Europe.

“Patent settlements are an area of concern, not least if there are situations where an originator company pays off a generic competitor in return for delayed market entry,” says Neelie Kroes, the EC commissioner for competition. “We need to monitor this type of agreement in order to better understand why, by whom, and under which conditions they are concluded.”

Although the EC isn’t specifying which companies were asked for documents, a separate EC press release says a formal antitrust investigation is under way at the Danish company Lundbeck concerning deals that may hinder the entry of generics competition to the firm’s citalopram, an antidepressant.

The monitoring program in Europe follows action in the U.S. to address similar deals between brand-name drug companies and generic drug companies (see page 22). The health care bill approved by the House of Representatives last year includes an amendment prohibiting payoffs to generics firms (C&EN, Aug. 10, 2009, page 8). The Senate is now considering a proposal for a similar ban as Congress hammers out final health care legislation.

Patent attorneys in the U.S. and Europe tell C&EN that the vetting of patent settlements is complicated by an inherent tension between antitrust law, which guards against monopolies, and patent law, which establishes short-term monopolies.

“You have patents on one hand, competition on the other,” says Neil Jenkins, an attorney with Bird & Bird in London, noting that his firm represents both brand-name drug firms and generic drugmakers. “Where the balance is at the moment is considered fair enough.”



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