Reverse Payment Settlements in the Pharmaceutical Sector: A European Perspective

Abstract

On 17 January 2011, the European Commission launched , a monitoring exercise of patent settlements in the pharmaceutical sector for the second time after the Pharmaceutical sector inquiry of 2009. As was the case for the first monitoring exercise launched in January 2010, a number of pharmaceutical companies were asked to submit copies of their patent settlement agreements concluded in the European Economic Area (EEA), together with any relevant annex, amendment or related agreement.The rationale for the monitoring exercise derives from some of the findings of the Pharmaceutical Sector Inquiry, which had highlighted the possibility that some of the agreements reached by originators and generics to settle IP-related disputes (generally believed to be efficiency-enhancing tools to save money on litigation costs), may in fact turn out to have anticompetitive effects on the market. This is particularly the case for so-called “reverse payment agreements”. These are settlements that involve a payment (in direct or indirect form) flowing in a direction that intuitively appears “reverse”, as money is paid by the patent holder (the originator) to the alleged infringer – a generic firm.