The Earlier the Better? Assessing Early Entry Agreements in the Pharmaceutical Sector

Abstract

Originator companies regularly conclude agreements with generic companies allowing for generic entry in the market. The European Commission’s sector enquiry (‘Sector enquiry’) shows that these agreements may arise outside patent disputes and before patent expiry (‘Early entry agreements’). The Sector enquiry highlights the strategic incentives of originators to accommodate entry before the loss of exclusivity and in particular the originators’ ability to manage the impact of generic entry on competition or to react to the presence of generics in the market.1 Early entry agreements may take different forms, but commonly involve the supply of the drug to the generic company, the distribution of the drug or the granting of a license or a marketing authorisation by the originator.2 They mainly arise less than one year before patent expiry, but they may also start earlier.3 Although some Early entry agreements only last for a few months, they sometimes last for years and in particular continue after patent expiry.4