The Balance between Competition Policy and Patent Rights in Terms of Reverse Paymentt - a Comparative Research between European Union and the United States

Abstract

In the pharmaceutical industry, it is not unusual that brand-name drug manufacturers have been compensating with large amounts of money potential generic entrants to induce them to delay bringing low-cost generic drugs into the market and to abandon its patent challenge and agree not to sell its generic drug product for a number of years. In the United States, for many years Federal Courts have refused to declare these “reverse payment” settlements, also called pay-to-delay payments, anti-competitive and/or subject them to the antitrust laws. In June 2013, however, the Supreme Court ruled in its “reverse payment decision” in FTC v. Actavis that reverse payment settlement agreements between branded and generic pharmaceutical companies are subject to antitrust scrutiny and should be analyzed under the traditional antitrust law’s “Rule of Reason”. Since 2008, following a broad competition inquiry into the pharmaceutical sector, the European Commission has been focusing increasingly on reverse settlement agreements in the European market. In 2013, the European Commission has handed an international pharma company the largest fine for not complying with EU competition law and restricting potential competition with generic producers. The core scope of this paper is to compare the legal approaches taken by the US and EU competition authorities in terms of reverse payment settlements and considers its recent development in the context of the US and EU case law. Furthermore, this paper analyzes how competition authorities in the US and EU are tackling these anti-competitive settlements.