Analysis of ECJ’s case law and Commission’s administrative practice in cases Lundbeck, Johnson & Johnson and Servier
The present article analyses the compatibility of pay-for-delay agreements with Article 101 of the Treaty on the Functioning of the European Union, in light of several recent cases before the European Commission and the General Court, namely Lundbeck, Johnson & Johnson, and Servier. These commercial agreements, also known as reverse payment patent settlements, are characterized by a value transfer from the original pharmaceutical patent rights holder to а generic company, which results in a delay in the ladder’s market entry.
The European Commission first examined pay-for-delay agreements following several tip-offs from national competition authorities which lead to its Pharmaceutical Sector Inquiry in 2009. The sector inquiry constituted an annual patent settlements monitoring exercise which helped initiate proceedings against a number of pharmaceutical companies, imposing fines totaling over €580 million.
In September 2016, the General Court confirmed the decision of the Commission against Lundbeck, holding that the generic undertakings involved in the pay-for-delay agreements were potential competitors of the originator company and that such agreements constituted restrictions of competition by their very object. The seminal decision of the court adds strength to the arguments used by the Commission in its ongoing pay-for-delay investigations, providing a somewhat coherent legal framework for the assessment of such anticompetitive practices.
However, significant uncertainty remains as the General Court’s Lundbeck ruling is subject to an appeal before the Court, the Servier Commission decision is on appeal before the General Court and the TEVA case is still in the making, as the statement of objections has been sent in July 2017 and a decision, which may be subject to an appeal before the General Court itself, is expected to be rendered in late 2018. As most of the infringements in the said cases bear numerous similarities, the body of precedents in this area of law has the potential to be harmonized in the following two to three years’ time at the earliest.
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 Dimitar Manolchev, LL.M. (Bruges, London), LL.B. (Strasbourg, Birmingham). Legal consultant – EU competition law, White & Case LLP (Paris).