(8 December 2014 - Brussels): The 5th monitoring report of patent settlements released by DG Competition on 5 December 2014 notes a continued increase in the number of patent settlement agreements involving a larger number of disputed products but a stabilization at low level of settlements limiting generic entry with a value transfer. The trends identified confirm the inefficiencies inherent in today’s patent litigation system.

EFPIA reiterates its longstanding position that patent settlement agreements are a symptom of a fragmented and partly inefficient enforcement regime in Europe as far as pharmaceutical patent disputes at the point of generic entry are concerned. “EFPIA expects the new Commission to act once and for all to tackle the root cause rather than the symptoms. The complex and dysfunctional framework for patent enforcement that we have across the 28 Member States, with on top competition investigations, has created considerable legal uncertainty for both innovators and generics without bringing any sensible solution” said Richard Bergström, EFPIA’s Director General. “EFPIA has made a concrete proposal for an Early Resolution Mechanism (“ERM”) to address patent disputes sufficiently in advance of generic launch to increase legal certainty for all stakeholders. ​The proposal includes improved transparency of key medicines patents. EFPIA calls on the Commission to add this issue to its 2015 work programme”. 

The proposal is for a 3-step process.

1. Innovator Disclosure of IP Position:At least one year before the loss of exclusivity, the innovator would be required to publish details of certain classes of patents protecting the product to enable generic companies to assess the risks of early entry.
2. Medicines Agencies Disclose Fact of Generic Marketing Authorisation Application:medicines agencies would be required to disclose information about generics’ applications for marketing authorization sufficient to allow the innovator to assess whether the generic in question might infringe its IP rights.
3. Application for Marketing Authorisation is the legal trigger for normal patent litigation:innovators then have the option to initiate ordinary infringement proceedings in a court of law on the merits. This would allow sufficient time in the majority of cases for the dispute to be resolved before the planned generic launch.

This proposal requires both innovators and generics to make limited disclosures that are proportionate to the goal of resolving patent disputes in good time. It limits the medicines agencies’ involvement to the disclosure of clearly defined information without interfering with the agency’s decision-making process.

Increased transparency allows patent disputes to be litigated in good time in the interests of legal certainty for all:

• Innovators can protect against the irreparable harm caused by undue early generic entry;
• Generics are assured of their IP position allowing them to invest securely in bringing their product to market;
• The need for protracted patent settlement agreements based on asymmetrical information and uncertainty about the IP position is avoided;
• National health systems and patients benefit from increased certainty as to the availability of generic products;

The proposed Early Resolution Mechanism is in line with the twin goals of achieving more competitive and efficient generic markets and providing strong IP protection to adequately reward and incentivise pharmaceutical innovation in Europe. EFPIA’s proposal offers value for national health systems and patients, by ensuring a smooth transition to off-patent markets and providing increased certainty as to the availability, timing and supply of generic alternatives.

The proposal can be downloaded here.