Pharmaceutical Settlements & Competition Law: Litigation View on Commission Sector Enquiry, Slides of Competition Law and Policy

Download Pharmaceutical Settlements & Competition Law: Litigation View on Commission Sector Enquiry and more Slides Competition Law and Policy in PDF only on Docsity! Pharmaceutical settlement agreements and competition law A litigation perspective on the Commission Sector Enquiry Docsity.com An introduction to the findings of the Sector Enquiry Docsity.com An asymmetry in settlement payments from originator to generic and generic to originator Docsity.com Settlements were criticized in the preliminary report Tool-box of strategies used by originator companies rom their medicines, in particular blockbusters, for as long as possible. These practices can delay generic entry and lead to healthcare systems and consumers paying more than they would otherwise have done for medicines. 1. strategic patenting 2. patent disputes and litigation ®. patent setlemens 4. interventions before national regulatory authorities, and 5. lite cycle strategies for follow-on products Docsity.com Settlements were criticized in the preliminary report In order to prolong the life cycle of their medicines, originator companies frequently combine two or more instruments from the "tool box" described above. plus secondary patenting (see Figure 4). Tigure 4. Cumulative use of instruments in the top-30 medicines facing expiry covered by the inquiry INN INN? INNS INN INNS INNS INNT. INNS INN INN 10) INN 17 INN 12, INN 13) INN 14 INN 15, INN 18, INN 17, INN 13) INN 13, INN 20) INN 21 INN 221 INN 23, INN 24) INN 25, INN 28) INN 27) INN 20, INN 23) INN 30) a 1 2 3 4 5 Il secondary patenting (1 cisputes and contacts El uitigation WB sotiements BS imerventions Source: Pharmaceutical Sector Inquiry Docsity.com Reverse payments and profit sharing: Agreements that are designed to keep competitors out of the market may also run afoul of EC competition law. to one or more generic agreements, in companies are an example of such articular where the motive of the agreement is the Groin Originator €0 penerieleollpatiles to the detriment of patients and public health budgets. ® Docsity.com A litigation perspective on the conclusions of the Sector Enquiry Docsity.com Classification of settlement agreements • A: no limitation on generic entry. • B.I: limitation on generic entry but no value transfer from the patentee. • B.II: limitation on generic entry with a value transfer from the patentee. Docsity.com Parties have the freedom to settle • The strength of both the patentee’s and the infringer’s case is liable to change during the litigation. • It is a principle of civil proceedings that parties have the freedom to discontinue proceedings. • Such termination involves bargaining on the parties’ original claims. Docsity.com Settling claims is equivalent to abandoning them • Settling claims made in Court is equivalent to not seeking the enforcement of the corresponding rights. • It is economically equivalent to not making these claims or not engaging in litigation. • Not engaging in litigation should not be deemed anticompetitive. • Thus merely making a compromise on Court claims should not be deemed anticompetitive. Docsity.com Settlements on bona fide Court claims should be lawful • Arguably a settlement should not be anticompetitive, if it involves only remedies that a Court could order. • It is submitted that any judicial remedy that can be granted by a Court, could form the subject matter of a bona fide settlement without infringing EU competition law. Docsity.com Settlement agreement limiting generic entry – type B • The Commission Report appears to cast some suspicion on settlement agreements that limit generic entry. • Para 742: “The generic company’s entry can be limited in several ways. The clearest limitation of generic entry is when the settlement agreement contains a clause explicitly stating that the generic company recognizes the validity of the originator company’s patent(s) and refrains from entering the market until the patent(s) have expired” (emphasis added). Docsity.com The source of the patentee’s monopoly is patent law • It should be recalled that it is patent law that prevents generic entry and not an eventual settlement agreement. • Type B.I. settlements merely recognize existing IP rights. • Accepting the validity of a patent and not entering the market until after its expiry, should not be deemed anticompetitive as it involves merely complying with the monopoly granted by patent law. Docsity.com Common settlement provisions that exceed judicial remedies • Limitations extending beyond the scope of the patent. • Limitations extending beyond the duration of the patent. • Commercial “side deals” (supply, exclusivity…). • Market and customer sharing. Docsity.com Reverse payments • If they involve a sum commensurate with what could be ordered by a Court against a patentee, then reverse payments should not be anticompetitive. • Difficulties arise when this payment involves: – sums related to the “value” of the patent that may be revoked; – in exchange for a delay in market entry. Docsity.com The value of patent monopoly • The “value” of the patent is the commercial value of the monopoly. • The value of the patent monopoly is commensurate with: – The profits that the patentee obtains through the exclusion of others. – The profits that the generic company could make by entering the market. Docsity.com Reverse payments • Reverse payments that involve a share of the value of the patentee’s monopoly, may be suspicious. • However, in the context of revocation proceedings, – unless the generic company has a revocation case so weak that it simply seeks to avoid Court costs, – what significant incentives would there be for settling a case without a reverse payment? Docsity.com