European Commission investigates Cephalon/Teva settlement

On 28 April 2011, the European Commission communicated that it is investigating whether an agreement between US-based Cephalon and Israel-based generic drugs firm Teva may have had the object or effect of hindering the entry of generic Modafinil (a drug used for sleeping disorders) in the European Economic Area (“EEA”) in breach of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”).

The investigation relates to a December 2005 settlement between Cephalon and Teva about patent infringement disputes in the United Kingdom and the United States concerning Modafinil.  Under the settlement agreement, Teva undertook not to sell its generic Modafinil products in the EEA markets before October 2012.  The settlement agreement is also subject to antitrust litigation in the United States initiated by the US antitrust authority FTC.

In 2008 and 2009 the Commission carried out a broad inquiry of the pharmaceutical sector, pointing out in particular the potential anticompetitive effects arising from certain business practices, notably certain types of patent settlements between originator and generic companies aimed at delaying the arrival into the market of cheaper generic medicines (sometimes also referred to as “pay-for-delay” settlements). [Gabriele Accardo]