UPDATE 5-EU to scrutinise drug patent settlements

Tue Jan 12, 2010 11:01am EST

*EU says will monitor patent settlement agreements

*Says asked for copies of settlements from companies

*Astra, Glaxo, Sanofi, Novartis, Roche, Boehringer contacted

*EU's Kroes: monitoring will provide possibility to act

(Adds Roche confirming it involved)

By Bate Felix

BRUSSELS, Jan 12 (Reuters) - Patent settlements between drug companies will undergo European Commission scrutiny over concerns some may prevent consumers from obtaining lower-priced medicines.

The European Union's antitrust watchdog said it had asked certain companies for copies of their patent settlements. The requests covered deals between originator and generic pharmaceutical companies from July 2008 to December 2009.

It did not identify the companies, but Britain's AstraZeneca PLC (AZN.L) and GlaxoSmithKline (GSK.L), France's Sanofi-Aventis (SASY.PA) and Novartis (NOVN.VX) and Roche (ROG.VX) of Switzerland said the Commission had contacted them about drug patent settlements.

The move follows a critical Commission report into the pharmaceutical sector last July that promised action to end delays in bringing less expensive generic drugs to the market.

"We have received a request from the EU Commission, as part of their ongoing monitoring, for information regarding interactions with generic manufacturers. We will be providing the Commission with all relevant information," said Claire Brough, a spokeswoman for Glaxo.

Privately owned Boehringer Ingelheim, Germany's second-largest drugmaker, also said it had received a questionnaire from the Commission and was cooperating.

A spokeswoman for AstraZeneca said the firm remained confident that all its agreements complied with the law and benefited consumers and parties involved in the settlements.

Roche spokeswoman Martina Rupp said the Swiss group was checking the request and was confident no antitrust laws had been violated.

"The Commission is in particular looking at patent settlements where an originator company pays off a generic competitor in return for delayed market entry of a generic drug," the EU executive said in statement on Tuesday.

The move was launched following an inquiry into competition in the pharmaceutical sector.

The EU executive vowed to pursue companies suspected of anticompetitive acts after investigations revealed some practices had cost healthcare providers about 3 billion euros ($4.4 billion) between 2007 and 2008.

The Commission has so far targeted a number of generic drugs makers including Matrix Laboratories Ltd MAXL.BO, now a unit of Mylan Inc (MYL.O); Niche Generics Ltd, part of Unichem Laboratories Ltd; and Israel's Teva Pharmaceutical Industries Ltd TEVA.O in its investigations.

"The Commission's pharmaceutical sector inquiry points to significant shortcomings in the pharmaceutical sector. Patent settlements are an area of concern," EU Competition Commissioner Neelie Kroes said in the statement.

"We need to monitor this type of agreement (patent settlements) in order to better understand why, by whom and under which conditions they are concluded. The monitoring will also provide us with the possibility to act should this become necessary," she added.

The Commission said it would analyse the agreements and publish a report. If a specific settlement raised additional questions, a more targeted request for information could follow and the requests could be repeated annually. (Additional reporting by Ben Hirschler and Kate Kelland in London and Frank Siebelt in Frankfurt, editing by Dale Hudson and Mike Nesbit) ($1=.6889 euros)

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