Drugmakers need to review their patent settlement agreements as a form of due diligence as the European Commission maintains its scrutiny of the pharmaceuticals sector, according to a leading law firm.

Simmons & Simmons has issued an update in the aftermath of the EC’s sector inquiry final report published in July last year which resulted in formal proceedings against Servier and five generic companies. This year has seen the start of antitrust proceedings against Lundbeck, and several dawn raids at the end of last year “suggest that other proceedings may be in the pipeline”, the lawyers say.

Following on from this, a fortnight ago, the Commission confirmed that it had addressed "requests for information" to a number of pharmaceutical companies, asking them to submit copies of their patent settlement agreements concluded between originator and generic companies over the last 18 months. Once the Commission has received all responses, it will "analyse the agreements and publish a short report providing a statistical overview."

Simmons & Simmons says the dawn raids in December “are an indication of the Commission's aggressive attitude and make it probable that more cases will follow”. Indeed, it is still bringing cases in the energy sector almost two years after the final inquiry report into that industry “and pharmaceutical companies should remain vigilant”.

The lawyers add that “it is less clear how the recent information requests for settlement agreements should be interpreted”. The scope of the Sector Inquiry, supplemented by the dawn raids, “should have provided ample ammunition to the Commission, but the further information requests could indicate that the information previously collected is insufficient to support the headline accusations”.

Alternatively, they added, “it could be seen as keeping up the pressure by letting the industry know it is still under scrutiny”. In any event, “the Commission has stated that these information requests could be repeated annually”.

The Simmons & Simmons update concludes that settlement agreements are a major area of focus and “companies should consider the need to review their patent settlement agreements as a form of due diligence”. Also they should “possibly seek a second opinion” on any existing deals they have.