Reverse payment settlements or “pay-for-delay agreements” between originators and generic drug manufacturers create heated debates regarding the balance between competition and intellectual property law. These settlements touch upon sensitive issues such as timely generic entry and access to affordable pharmaceuticals and also the need to preserve innovation incentives for originators and to strengthen the pipeline of life-saving pharmaceuticals. This book is one of the first to critically and comparatively analyse how such patent settlements and various other strategies employed by the pharmaceutical industry are scrutinised by both United States (US) and European courts and enforcement authorities, and to discuss the applicable legal tests and the main criteria used for their assessment. The book’s ultimate objective is to provide guidance to the pharmaceutical industry regarding the types of patent settlements, strategies and conduct which may be problematic from US antitrust and European Union (EU) competition law perspectives and to assist practitioners in structuring settlements which are both efficient and compliant. To this end, an exhaustive legal analysis of some of the most controversial issues regarding pharmaceutical patent settlements is provided, including: – the lengthy split among US Circuit Courts on the issue of pay-for-delay settlements, its resolution by the US Supreme Court in FTC v. Actavisand subsequent jurisprudence; – the decision of Lundbeck v. Commissionby the European General Court and the Servier decision of the European Commission; – the Roche/Novartisdecision of the European Court of Justice and the most important decisions by National Competition Authorities on pharma patent settlements in the EU; – an overview of other types of strategies such as product-hopping and product reformulations, no-authorised generic commitments, problematic side-deals, mechanisms affecting generic substitution; – the rejection of the “scope of the patent” test in both the US and the EU and the balancing of patent law and antitrust law considerations in the prevailing applicable tests; – the benefits of settlements and the main criteria for assessing their legitimacy under US antitrust and EU competition law. The analysis provides concrete examples of both illegitimate and legitimate settlements and strategies, emphasising on conduct that falls within a grey zone and on the circumstances and criteria under which such conduct could be deemed problematic from an antitrust perspective. This book will serve as a valuable guide for pharmaceutical companies wishing to minimise the risk of engaging in conduct that could potentially infringe US antitrust and EU competition law. It further aims to save courts and enforcement agencies and also practitioners and academics considerable time and resources by providing an exhaustive analysis of the relevant caselaw, with the ultimate goal to increase legal certainty on the most controversial aspects of patent settlements in the pharmaceutical industry.

Editors --Contributors --Foreword --Preface --Pharmaceutical Patents and Competition Issues --What Is Going on in National Systems?

Patent settlements between originator and generic firms in the pharmaceutical industry have been challenged by antitrust and competition authorities in the U.S. and the EU. Particularly Settlements with large "reverse payments" to generic firms raise the concern of collusive behaviour for protecting weak patents and delaying price competition through generic entry and therefore harming consumers. However, it is still heavily disputed under what conditions such patent settlements are anti-competitive and violate antitrust rules. This article scrutinizes critically what economic analysis has so far contributed to our knowledge about the effects of these patent settlements and the possible rules for their antitrust treatment. An important claim of this paper is that the problem of patent settlements can only be understood, if we analyze it not only from a narrow antitrust perspective but also take into account its deep interrelationship with the problems (and the economics) of the patent system. Therefore we identify three different channels of effects, how patent settlements can influence consumer welfare: (1) price effects, (2) innovation incentive effects, and (3) effects via the incentives to challenge weak patents. The paper critically analyzes the existing economic studies and identifies a number of Research gaps, especially also in regard to trade offs between different effects. It also suggests that policy Solutions for these patent settlements should also be sought in combination with patent law solutions.

Although brand-name pharmaceutical companies routinely procure patents on their innovative medications, such rights are not self-enforcing. Brand-name firms that wish to enforce their patents against generic competitors must therefore commence litigation in the federal courts. Such litigation ordinarily terminates in either a judgement of infringement, which typically blocks generic competition until such time as the patent expires, or a judgement that the patent is invalid or not infringed, which typically opens the market to generic entry. This book introduces and analyses innovation and competition policy issues associated with pharmaceutical patent litigation settlements. It begins with a review of pharmaceutical patent litigation procedures under the Hatch-Waxman Act, then introduces the concept of reverse payment settlements, and analyses the status of reverse payment settlements under antitrust laws, and discusses congressional issues and possible alternatives.