EU pharma originators v generics: the latest news

A couple of hours ago the news broke ("EU regulator demands patent papers in pharma probe") that the European Commission has demanded today to see a "selected number" of patent dispute settlements reached by pharmaceutical companies as part of a sector-wide antitrust probe into generic medicines.

Right: drug originators are now working on a way to turn patents into gold, while European Commissioners strive to turn them into dross ...

According to this news item,
"... Brussels wants patent settlements reached between originator and generic pharmaceutical firms from July 2008 to the end of 2009, notably those where "an originator company pays off a generic competitor in return for delayed market entry of a generic drug."

The commission, which polices competition in the EU, said its probe into the multi-billion euro sector had found that some settlements might deprive consumers of a broader choice of medicines and at lower prices [The same can be said of some successful patent infringement actions. Presumably the criteria by which the settlements are to be measured will include the strengths and weaknesses of legal challenges to the validity of the patents and the merits of their owners' legal claims to exclusivity].

According to commission figures, each European citizen spent an average of 430 euros (622 dollars) on medicine in 2007 [for the same price he could have bought 44 one-day London travel cards ...]. The market for medicines was worth some 214 billion euros at retail prices.

Brussels did not identify the companies involved, saying only that "a selected number" had received requests for copies of these deals. [Merpel wishes there had been more disclosure. She's sure that the Commission could have given the selected number, and the number from which the selection had been made. We learn later of "200 settlements", but are these all of disputes between originators and generics? It's not clear]

"We need to monitor this type of agreement in order to better understand why, by whom and under which conditions they are concluded," said outgoing Competition Commissioner Neelie Kroes. "The monitoring will also provide us with the possibility to act should this become necessary."

Her services said they would analyse the details and request more specific information if necessary. The regulator also threatened to repeat the process each year until the problem is addressed. ["Foul!" cries the IPKat. This presupposes that (i) a problem exists and that (ii) repeatedly asking for information about it will cure it. Let's look at the evidence first and see whether there's a problem. If there is, then fair enough -- let's deal with it]

The demand is part of an investigation announced in July into the relationship between companies that patent their products as brand-named medicine [!], as well as their ties with generic drug producers.

According to a commission report produced in the summer, generic drugs cost on average 40 percent less two years after they enter the market and save patients and insurance firms money without compromising on effectiveness.

But some companies have in the past been accused of using patent strategies to stop generic medicines hitting the market, or tying up potential competitors in legal disputes.

Among the tactics often used, drug developers were found to file multiple patent applications for the same medicine, leaving little scope for generics to be developed.

In the worst example uncovered, 1,300 separate filings were made for a single medicine across the 27-nation EU. [The IPKat seems to recall some discussion of this. Can readers jog his memory?]

In another tactic, drug companies were found to often launch patent litigation against potential rivals -- nearly 700 cases were found -- slowing down their entry to the market. [But isn't this what happens in every industrial sector in which patents are granted?]

On average, such cases would drag on for three years. Most were lost by the company that developed the original drug [but look at all the grounds on which the originator can lose: lack of novelty, lack of inventive step, claims interpretated so as to exclude the allegedly infringing act, etc. It's tough owning a patent]. Some 200 were settled out of court []".
EU pharma originators v generics: the latest news EU pharma originators v generics: the latest news Reviewed by Jeremy on Tuesday, January 12, 2010 Rating: 5


  1. While I appreciate that pharmaceutical companies are making a killing off of their products, who, pray tell, will be footing the bill for the costly research behind the medication if big pharma is not allowed to earn big money?

  2. RT Jennifer: The argument made most frequently regarding the research costs of the pharma industry is that they are less than their advertising costs. Mind you, I've never been really sure what this argument is intended to prove...

    The thing that bothers me about the Commission actions is that "an originator company [paying] off a generic competitor in return for delayed market entry of a generic drug" doesn't appear to be to be an issue of patent practice, but one of business agreements between competitors (legal or otherwise). I would be quite concerned if this was used as evidence to support an investigation into the patent system.

    Also: "using patent strategies to prevent generics from hitting the market"... isn't that the purpose of the patent system?! I think someone's been listening to lobby groups again. Next, the Commission will be telling us that recording artists deserve longer copyright terms, just because Cliff Rich... Oh, wait a minute...

  3. Re Dave: "Also: "using patent strategies to prevent generics from hitting the market"... isn't that the purpose of the patent system?!". Er, no. The point of the patent system is to provide a reward for genuine innovation and thus encourage R&D, ultimately for the benefit of human health. However, the way in which some aspects of the patent system in Europe appear to be used at the moment does indeed suggest that the point of the patent system is to delay generic entry. (Delay = making sure that generic entry is later than it otherwise could / would have been). It's ultimately a question of balance. A pharma company that invests millions / billions on R&D should be rewarded with patent protection for its innovation - period. When such patent protection expires then the market opens up for generic competition, as it rightly should. However, the patents that end up being the ones that effectively regulate generic entry often have very little to do with genuine innovation.

  4. RT Anonymous: I meant that, in more general terms, the point of the patent system is to grant a time-limited monopoly, preventing others from using your idea without your permission.

    The higher purpose of the system is to stimulate innovation, granted, but the dirty method by which it achieves this is monopoly, however much policy advisors are told to avoid the word. And the patent system doesn't exist "ultimately for the benefit of human health". It exists to stimulate innovation. Whether that innovation is beneficial or detrimental to human health is besides the point.

    Naturally, if a patent is granted which is not legally considered to be innovative (either through lack of novelty or lack of inventive step) then that represents an abuse of the system. But if the checks and balances in place to prevent abuse of a system are not functioning properly, one fixes the checks and balances - one doesn't change the system.

  5. Here's the Commission's 5th report on pharma patent settlements -


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