Patent Settlements Research Articles

Pay‐for‐delay with settlement externalities

AbstractPay‐for‐delay patent settlements, in which the incumbent patentee pays a potential entrant to withdraw a patent challenge and stay out of the market, cost patients and taxpayers billions of dollars in higher pharmaceutical prices. We show that in markets with one incumbent and several entrants, the possibility of conditioning such settlements on litigation outcomes against other entrants results in the exclusion of all entrants from the market. When conditional contracts are infeasible, the incumbent licenses the patent or fights entry in court: the resulting competition benefiting consumers. Prohibiting all pay‐for‐delay settlements increases litigation and may harm consumers by reducing licensing.

Patent Settlements: An Overview of US, EU and National Case Law

Patent Settlements: An Overview of US, EU and National Case Law

An Event Study of Perindopril (Servier) Reverse Payment Patent Settlements' Case: Is Krka Truly an Exception Within the Pay-For-Delay Commission Decision?

The article aims to fill the gap in the literature on reverse payment patent settlements between patent-holders and generic pharmaceutical firms in EU competition law. Based on the event study of the Perindopril (Servier) case of the European Commission, the research provides a novel assessment of the welfare effects of Commission enforcement and the following judiciary decision on the legality of Commission sanctions. Within the case, the analysis paid particular attention to the generic corporation Krka because Commission fined Krka for the settlement with Servier that did not include the reverse payment, and the Commission decision did not survive the scrutiny of the General Court. The relative economic power of Krka in the perindopril market is also a factor that, together with the enforcement effect assessment, provides a different perspective of the event study's normative implications to the existing research.

Regulating Reverse Payment Agreements in Pharmaceutical Market: A Comprehensive Framework for Antitrust Review

Reverse payment settlement agreement is a type of arrangement between original and generic drug manufacturers that could potentially violate Antitrust Laws by limiting competition, typically appear in the pharmaceutical market. This paper addresses the impact of these agreements on public interests, and the challenges in conducting antitrust review on these agreements. This paper then proposes a comprehensive framework for regulating reverse payment agreements in the context of China’s extensive and complex pharmaceutical market by drawing on the experiences of the United States and the European Union. The framework introduces a two-step antitrust review system for regulating patent settlement agreements, which is suggested by the author to be applied in both patent litigation and daily detection. This paper also advocates establishing an agreement filing system and utilizing the antitrust public interest litigation system in antitrust regulation. This proposed framework provides specific guidance on initiation of antitrust review with respect to multiple backgrounds, in order to protect consumer interests in affordable healthcare, deter anti-competitive behavior, and contribute to the theoretical basis for future legislation.

Restrictions ‘by object’ after Generics, Lundbeck, and Budapest Bank: are we any wiser now?

Abstract ‘Restrictions “By Object” After Generics, Lundbeck, and Budapest Bank: Are We Any Wiser Now?’ summarizes the CJEU’s jurisprudence on the question when an agreement or a concerted practice between undertakings restricts competition ‘by object’ and when ‘by effect’, Article 101(1) TFEU. It turns out that there are few certainties in this area. Instead, there is a bewildering array of standards for assessing the consequences of agreements on the relevant market. Time and again, it is unclear how ‘abstract’ or ‘concrete’ the assessment has to be. Not much more clarity comes from the recent judgments in Generics, Lundbeck, and Budapest Bank on patent settlement agreements and price fixing, respectively. Nevertheless, they contain the elements of a simple and comprehensive test that dispenses with the complications that have built up in the case law.

Reverse-Payment Settlements Under EU and US Patent Law: Convergence in Remedies

Abstract This paper investigates the existing case law on reverse-payment settlements from a comparative perspective, focusing on the US and EU panoramas. In this respect, we will illustrate the emergence of patent-related proxies in the anticompetitive assessment, which contaminate the antitrust benchmarks in a problematic way, with the effect of hampering patent law and policy. Primarily we will delve into seminal decisions in the EU framework. In this regard we will observe how the Court of Justice of the European Union (CJEU) shifted from a quick-look approach towards a case-by-case antitrust analysis of patent settlements, progressively neglecting, but not eliminating, patent-related presumptions. Then we will look at the fragmented US case law scenario. We will explore the various benchmarks deployed to challenge these agreements, highlighting the differences and similarities with the EU approaches. It will be concluded that a strong IP-law-based perspective about these agreements has arisen in both legal systems. This perspective orientates the anticompetitive assessment through quasi-absolute presumptions, hindering the consistency of competition law remedies and misrecognising the cruciality of patent law and policy. Therefore, we will try to outline that the intermingling of criteria adopted to scrutinise reverse-payment settlements and similar over-exclusionary strategies is pernicious under both antitrust and patent law.

The Fate of FTC v. Actavis, Inc. in the Biosimilar Context—Does and Should the FTC v. Actavis Decision Apply to Reverse Patent Settlements Between Brand Drug and Biosimilar Manufacturers?

The Fate of <i>FTC v. Actavis, Inc</i>. in the Biosimilar Context—Does and Should the <i>FTC v. Actavis</i> Decision Apply to Reverse Patent Settlements Between Brand Drug and Biosimilar Manufacturers?

Commentary on C-307/18 Generics (UK) Ltd v Competition and Markets Authority: competition delayed, competition denied?

This issue’s Contemporary Critique discusses the ruling of the European Court of Justice (ECJ) in Generics (UK) v Competition and Markets Authority. Anticipated as it was, the judgment is something of a milestone in EU antitrust. For one, it marked the first foray by the EU’s apex court into the legal minefield of reverse patent settlements that have, over the past decade, sparked considerable debate in academic and policy-making spheres alike. For another, Generics (UK) is a quite sweeping judgment, addressing head-on several foundational concepts of EU competition law. It therefore has ramifications for EU antitrust enforcement beyond the specific issue at the heart of the case. In her Critique, Krystyna Kowalik-Bańczyk, judge at General Court of the EU, offers a comprehensive reading of the ECJ’s ruling. Generics (UK), she ultimately argues, provides timely and clear clarifications regarding several points of uncertainty that had accumulated over the years. In her view, the Court’s pronouncements should not be viewed as an attack on patent holders but rather a defence of the competitive process.

Optimal Incentives for Patent Challenges in the Pharmaceutical Industry

In this paper, we show that a provision in antitrust law to allow patent settlements with a later market entry of generics than the date that is expected under patent litigation can increase consumer welfare. We introduce a policy parameter for determining the optimal additional period for collusion that would incentivize the challenging of weak patents and maximize consumer welfare. While in principle, later market entry leads to higher profits and lower consumer welfare, this can be more than compensated for if more patents are challenged as a result.

Patent Settlements Reach the CJEU; Pay-TV Licensing Commitments Annulled; Commission Analyses Patent Licensing Programmes: A Survey of Developments at the Intersection between Competition Law and IP Law in the Past Year

Patent Settlements Reach the CJEU; Pay-TV Licensing Commitments Annulled; Commission Analyses Patent Licensing Programmes: A Survey of Developments at the Intersection between Competition Law and IP Law in the Past Year

PAY-FOR-DELAY AGREEMENTS UNDER EU COMPETITION LAW – A COMMENT ON PAROXETINE

Summary The Court of Justice of the European Union (“Court of Justice”) issued its first ruling on pay-for-delay agreements, in reply to a reference for a preliminary ruling from the UK’s Competition Appeal Tribunal (“CAT”) during its review of the appeal of a Competition and Markets Authority (“CMA”) decision applying a fine to GlaxoSmithKline (“GSK”) and five generic manufacturers for having entered into agreements settling patent disputes relating to GSK’s antidepressant paroxetine, on the basis that such agreements infringed competition rules. In its Paroxetine ruling of 30 January 2020[1], the Court of Justice found that patent settlements are not, by their very nature, anticompetitive; however, generic manufacturers can be regarded as potential competitors to the originator manufacturers when they have announced their intention to compete in the same market as the originator and, as such, patent settlement agreements are to be reviewed as horizontal agreements between competitors. Finally, a payment from the originator to the generic manufacturer in a patent settlement agreement is not enough to qualify such an agreement as a restriction of competition by object (the agreement is not anticompetitive by its very nature), unless there is no other justification for the payment other than to compensate the generic manufacturer for accepting to delay its entry in the market. In those circumstances, the Court finds that such an agreement will constitute a restriction of competition by object[2]. In this comment, we review the Court’s findings in relation to the issue of potential competition between the originator and the generics manufacturers and the qualification of this agreement as a restriction of competition by object. Keywords: pay-for-delay; restriction; competition; agreement; settlement; patent

Legal Obstacles to Biosimilar Market Entry

Improving the market availability and penetration of biosimilars, “follow-on” versions of biologic products, will require attention to key legal obstacles. Because biosimilars offer the potential for sizeable cost savings to payors and improved access to biologic drugs for patients, obstacles to the timely licensure and market availability of biosimilars are of major public health significance. Issues around intellectual property, potentially anticompetitive contractual arrangements with purchasers and insurers, and laws governing automatic substitution of biosimilars for biologics merit particular attention. This Article examines several key legal obstacles to biosimilar market entry in the United States, including (1) the complexity and imprecise boundaries of the exchange of patent information codified in the BPCIA; (2) patent thickets that protect biologic reference products; (3) unsettled antitrust law surrounding reverse payment patent settlements (i.e., “pay-for-delay” agreements); (4) contractual arrangements such as bundled purchase agreements and formulary exclusivity provisions; and (5) state laws that regulate substitution of biosimilars for biologics at the pharmacy level. Strategies to address these obstacles include reforms to the patent system to curb issuance of ancillary secondary patents intended to delay competition, greater transparency around biologic patents, reconsideration of the need for a regulatory designation of interchangeability, and better detection and enforcement of deliberately anticompetitive practices.

Generics (UK) Ltd and Others v. CMA: Patent Settlement Agreements Unpacked

Generics (UK) Ltd and Others v. CMA: Patent Settlement Agreements Unpacked

Servier, Film Copyright Territorial Restrictions, Android, Guess, Nike and Sanrio: A Survey of Developments at the Intersection between Competition Law and IP Law in the Past Year

This Survey reviews EU competition law developments involving, or relevant to, intellectual property (‘IP’) rights in the period November 2018 to October 2019. The Survey covers the following: (i) the General Court’s Servier judgment on patent settlement and related agreements and market definition in the pharma sector; (ii) film copyright territorial restrictions—commitments challenged before the General Court and further commitments offered; (iii) the Commission’s Google Android Decision; and (iv) the Commission decisions in Cases AT.40428—Guess, AT.40436—Nike and AT.40432—Sanrio. In December 2018, the General Court handed down a series of parallel judgments relating to a number of patent settlements and related agreements entered into between Servier, its subsidiary Biogaran, and several manufacturers of generic pharmaceuticals (hereafter ‘generics’ or ‘generic companies’). Each of the agreements between Servier itself and the various generic companies followed (and ended) patent litigation, and each involved some limitations on the generic company’s ability to enter the market.

Generic Entry Before the Agreed-Upon Date in Pharmaceutical Patent Settlements

ABSTRACT Drug patent litigation settlements specify a date for generic entry and typically include a so-called acceleration clause allowing the generic to enter earlier in certain circumstances. An agreed-upon date between a brand and a generic with “first-filer” status is particularly salient because this date also affects when other generics may enter. It has been unclear the degree to which acceleration clauses increase competition—by accelerating entry—or decrease competition, by deterring pursuit of entry by potential generic competitors. This paper documents the entry outcome after first-filer-brand settlements by tracking how often acceleration clauses in these settlements in fact accelerate entry. In no case was a first filer’s 180-day exclusivity period accelerated because of a later filing generic winning patent litigation or settling for an earlier entry date. In the cases where early entry occurred, the first filer had lost its right to the exclusivity period, typically by failing to receive tentative FDA approval within 30 months of its filing; or other generics shared first-filer status. An acceleration clause paired with the 180-day exclusivity period appears to effectively deter other generics and, at least in the instances we observed, never to have resulted in an actual “accelerated” entry.

Should Pay for Delay Be a Cause for Concern in Japan?

Yes, it should. Pay for delay settlements have raised concern across the globe and have led to significant competition law scrutiny in the US and Europe. Branded pharmaceutical companies use patent settlements to pay potential generic entrants in order to stay off the market, thereby reducing competition and harming consumers. This conduct has been found to be unlawful by the US Supreme Court and the EU General Court. In Japan, however, such anticompetitive settlements allegedly do not take place, despite offering similar economic incentives to pharmaceutical companies in the second largest pharmaceutical market in the world. This is intriguing and warrants close scrutiny. This article is the first to investigate, based on a comparative analysis with the US and EU whether or not the Japanese pharmaceutical sector is susceptible to pay for delay settlements. We come to the conclusion that the regulatory regime in Japan features the necessary prerequisites to make pay for delay settlements a feasible yet anticompetitive drug lifecycle management strategy. Pay for delay, Japan, pharmaceutical, US antitrust, competition, comparative analysis, theory of harm, Japanese Antimonopoly Act, Europe, patent settlement

The anti-monopoly regulation of reverse payment patent settlement agreements in the pharmaceutical industry in China*

ABSTRACT In recent years, the legality of reverse payment patent settlement agreements (RPPSAs) in the pharmaceutical industry has become a contentious issue and attracted the attention of antitrust authorities in many countries. It is a sophisticated intersection of patent protection — encouraging research and development in the pharmaceutical industry — and competition enforcement — maintaining fair and effective competition in the relevant market. Given the complexities, there is no unanimous approach adopted to deal with the compatibility of such RPPSAs with antitrust law. As China’s legal and economic context has changed considerably, there will be great possibility that such RPPSAs will also appear in China. However, there has not been an effective anti-monopoly analysis framework established that focuses on regulating such RPPSAs in China. Therefore, this article proposes that China should prepare itself in advance from two perspectives. On the one hand, a competition inquiry should be conducted in China’s pharmaceutical industry to evaluate the development of RPPSAs; on the other hand, a basic analysis approach should be confirmed in the forthcoming anti-monopoly guidelines for intellectual property rights (IPRs). This article proposes that the anti-monopoly scrutiny should mainly focus on the patent settlement agreements with value transfer from a brand-name drug company to a generic one in exchange for the latter’s commitment to delay market entry. Then, China’s Anti-monopoly Law should be applied differently on the basis of the timing at which the generic drugs are permitted to enter the market. Finally, this article provides some important and typical factors of RPPSAs that should be examined carefully.

Anticompetitive Patent Settlements – Where Are We Ten Years After the European Commission’s Pharmaceutical Inquiry?

In 2009, the European Commission published a final report on its market inquiry into the pharmaceutical sector. The report revealed the authority’s concerns regarding market practices of pharmaceutical originator companies aimed at delaying the market entry of cheaper generic pharmaceutical products. One of the delaying practices identified by the European Commission were patent settlements between an originator and a generic company including: (i) a value transfer from the originator to a generic company, and (ii) an obligation of a generic company not to enter the market. These patent settlements were called pay-for-delay agreements since the payment was allegedly made in exchange for the non-market entry obligation. The European Commission continued the investigation of patent settlements by its continuous monitoring. It also initiated antitrust proceedings that terminated with huge fines imposed on pharmaceutical companies. The appeals are now pending before the EU courts. Ten years after the publication of the final report on the market inquiry, this article aims to summarise the development of the case law and provide its critical analysis. The article focuses on the analysis of pay-for-delay agreements as infringements of Article 101 TFEU only and does not consider the conclusion of these agreements as an abuse of a dominant position.

Proportional Restraints in Horizontal Patent Settlements

Competitors embroiled in a patent dispute always prefer to preserve and share monopoly profits, even if the patent is likely invalid. Antitrust has come to embrace a policy that requires horizontal settlements to be proportional in the sense that their anticompetitive effects are commensurate with the expected result of counterfactual patent litigation, which might have excluded the patentee's rival(s). But the standard presents serious practical complications, due to the uncertainty about counterfactual litigation, and as yet it has only been successfully applied to one type of settlement. We show that one can evaluate proportionality by focusing entirely on the nature of the firms' agreement, as this determines what the firms can agree on in relation to their expectations about litigation. We exploit this to propose a new enforcement approach that avoids the implementation problems with the current regime. This is a previous draft. The updated version is available at: https://papers.ssrn.com/abstract=3670815

The European Court of Justice in Generics UK: New Frontiers regarding the Legitimacy of Patent Settlements in Competition Law?

The European Court of Justice in Generics UK: New Frontiers regarding the Legitimacy of Patent Settlements in Competition Law?