Almost every medicine that reaches the market stems from a licence agreement between the patent owner and the company that exploits the patent to manufacture the medicine. Hidden inside these contracts is the most insidious risk for businesses: crossing, perhaps without realising it, the line between legitimate collaboration and a prohibited agreement. Last April, the European Commission updated the TTBER (Technology Transfer Block Exemption Regulation), the regulation that draws that line, introducing clearer criteria for some scenarios that are very common in the pharmaceutical sector. Understanding where the line has moved means knowing which clauses can still be signed and which cannot.
Prohibitions and exemptions
The basic rules are well known. Article 101 of the Treaty on the Functioning of the European Union prohibits, in principle, agreements between undertakings that restrict competition, unless the agreement allows consumers a fair share of the resulting benefit. In pharmaceuticals this typically means faster generic entry, and therefore lower prices, or the timely removal of manufacturing and regulatory obstacles. It is no coincidence that the Commission takes a particularly strict view of pay-for-delay agreements, which deny precisely this benefit by artificially delaying the market entry of cheaper alternatives. To avoid having to assess, case by case, the thousands of licences signed every year in Europe, the Commission translated this principle into a specific instrument for technology licensing. The TTBER has long identified entire categories of agreements presumed to be lawful, provided they stay below certain market share thresholds and do not contain particularly serious (so-called “hardcore”) restrictions, such as resale price maintenance. The version of the regulation updated in April leaves these parameters and the related prohibitions unchanged, but introduces far more detailed guidelines than before, rewritten in the light of years of litigation, particularly in pharmaceuticals.
Where the boundaries shift
The new guidance focuses on the following areas:
Data licensing: where data licensed together with patents amount to a trade secret or are protected by copyright, the same safe harbour thresholds and the same automatic treatment that the TTBER provides for patents also apply; otherwise, a case-by-case assessment is required.
Technology pools: when several companies combine the patents needed to produce a medicine and license them as a single package, the pool is considered safe if it is open to all interested parties, includes only technologies that independent experts confirm are essential, offers fair and non-discriminatory licences and leaves licensees free to challenge the patents or develop alternatives. Without these conditions, the pool risks being treated as a price cartel.
Licensing negotiation groups: this is an entirely new area, never regulated before. The typical case is that of several generic manufacturers interested in the same active ingredient who join forces to negotiate licence terms with the patent holder. Below a 15% market share threshold, the arrangement raises no concerns. Above that threshold, it remains lawful only if the group discloses its collective nature, does not coordinate participants on prices or quantities and leaves each of them free to negotiate independently. Otherwise, it slides into a buyers’ cartel.
On this third front, uncertainty over how the rules will be applied remains fairly high. During the consultation, the Commission had envisaged a genuine “safe harbour” for groups meeting those criteria; in the final text it backtracked, stating that it does not yet have enough enforcement experience to guarantee automatic treatment. Meeting the conditions set out therefore reduces the risk but does not guarantee an automatic exemption: the assessment remains, in part, case by case.
For now, an outright buyers’ cartel in this area is more a risk flagged by the Commission than a widespread phenomenon in European practice, and the new guidelines are intended precisely to draw the line before cases multiply. International divergences further complicate the picture. The European approach, which assesses economic effects case by case, has no equivalent in the United States, where the Department of Justice (DOJ) views collective negotiations between licensees with far greater suspicion, often treating this model as an unlawful agreement. For companies operating on both sides of the Atlantic, the challenge is therefore to manage standards that are not yet aligned.
Pay-for-delay and products in development: two long-awaited clarifications
The section businesses had been waiting for most was the one on so-called “pay-for-delay” agreements. Here, the Commission confirms what European case law has already made clear in recent years: the agreement is prohibited, regardless of its actual effects, if the payment serves solely to keep the competitor out of the market. Payments that compensate the genuine costs of litigation already under way, or that remunerate goods and services actually supplied, remain lawful.
There is also a technical but far from marginal clarification for those working on products still in development: a technology that has not yet generated any sales counts as having a market share of zero when calculating the thresholds. This is useful for licences on active ingredients still awaiting authorisation, when it is not yet known whether, or how much, they will sell.
What changes in practice for businesses
The Commission is therefore not overhauling the framework, but narrowing its grey areas. For companies, this opens a necessary phase of review of existing contracts, especially where uncertainty has so far left room for broad interpretations. The new regime applies from 1 May 2026, and agreements signed from that date onwards must comply with the new criteria straight away. Those who signed earlier need not act urgently: the automatic exemption remains valid until 30 April 2027, irrespective of the new parameters. After that date, however, the protection expires, and only contracts aligned with the new guidance will continue to benefit from the exemption. It therefore makes sense to use this transitional year to review and, where necessary, amend the most exposed clauses, especially in the three areas where the room for independent interpretation has narrowed: data, technology pools and negotiation groups.
