07 February


Watch out for the amicable settlement of disputes between owners of patented and generic medicines: the Court of Justice finds it contrary to the TFEU



The EU Court of Justice has identified the criteria according to which an amicable settlement between the owner of a pharmaceutical patent and a manufacturer of generic medicines is contrary to the rules of the TFEU established to protect competition.

Notably, the Court of Justice clarified that the owner of a patent for the manufacturing process of an active ingredient that has become public domain and the manufacturers of generic medicines that are preparing to enter the market of the originator are in a potential competitive situation. In various case law, contradiction is seen on the validity of this patent or the counterfeit nature of generic medicines if it is shown that the manufacturer of generic medicines actually has the definitive approval and ability to enter the market; it should not face obstacles to such access of an insurmountable nature (a circumstance that is for the referring court to verify).

In addition, the Court ruled that the agreement to settle a pending court case between a producer of originator medicines and a manufacturer of generics in competitive situations by means of which the latter agrees not to enter the originator's market and not to continue its action of nullity of the relative patent during the period of validity of the agreement, in exchange for transfers of money by the manufacturer of the originator medicines, constitutes an agreement aimed at preventing, restricting, or distorting potential competition.

This is provided that:

i. all the available elements show that the positive transfer amount from the owner of the originator medicine to the manufacturer of generic medicines is explained only by the commercial interest of the parties in agreeing not to enter into competition based on the merits;

ii. the amicable settlement in question is not accompanied by proven beneficial effects for competition, such as to reasonably doubt that it would be substantially damaging to competition.

Lastly, the EU Court stated that an amicable agreement of the company that owns the originator that serves to temporarily keep potential generic-producing competitors out of the market constitutes the abuse of a dominant position within the meaning of Art. 102 of the TFEU, if such strategy is suitable for limiting competition (Court of Justice, judgement of 30 January 2020, in case C-307/18).