The European Pharmaceutical Sector

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Introduction The European pharmaceutical sector is a EUR multi-billion industry that, not only contributes to the competitiveness of Europe in the world market, but also helps drive its economic growth. With such prominence, there is no surprise to why it is perhaps one of the most heavily regulated sectors in the European Union. The European Commission has taken extensive measures to ensure that dominating pharmaceutical companies are not abusing their dominant position of power. At the same time the Commission has to be able to promote the development of new medicinal products. This has proven to be an arduous task as pharmaceutical companies developing new medicinal drugs have to overcome pervasive and diverse regulations…show more content…
During the development process, originator companies will seek to obtain a wide variety of patents, sometimes even up to 1300 patents that will be used to protect their product against generic competition (Hareid 737). Patents are often used in a variety of different ways, by originators, to limit generic companies’ freedom of operation in areas of possible overlapping products. Generic companies will often fight back by challenging the validity of some of these patents or even launch their own generic product, while the patents are still in effect, forcing originator companies to bring up litigation to enforce their patents. Most often generic and originator companies decide to enter a settlement agreement, which will avoid the costly and time consuming litigation process the originator company will have to face (Clancy, Geradin, & Lazerow 154). This type of settlement agreement is referred to as a reverse settlement, where the patent holder (originator) will pay the infringer (the generic company) to settle the dispute. These types of settlements have drawn the attention of the Commission, as it grew suspicious of the legality of such settlements. The Commission grew worried as it began to question how these settlements were affecting the open market and if these settlements would delay generic entry to the market. The Commission took notice of a steady decline of the availability of generic drugs to member states. There was also a
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