Margherita Colangelo ‘Reverse Payment Patent Settlements in the Pharmaceutical Sector Under EU and US Competition Laws: A Comparative Analysis’ (2017) World Competition 40(3) 47

As its name indicates, this paper – which can be found here – compares the European and American approaches to pay-for-delay agreements – i.e. those agreements between an originator and a generics manufacturer where the former pays the latter to settle a patent injunction and agrees conditions to delay generic entry into the market. This payment goes against the standard expectation that a defendant in a patent suit would pay an IP-holding plaintiff to settle, but it is nonetheless economically rational for both parties: ‘the profit that the generic entering the market anticipates selling at a significant discount to the price of the brand-name product will be much less than the profit the brand-name drug company loses from the same sales applying the monopolistic price’. Settling the dispute eliminates the potential for competition and allows the parties to share profits that would otherwise be eroded by lower prices. The argument is that, while the case-mix on each side of the…

Jonas Severin Frank ‘Patent Settlements in Europe and the Lundbeck Case: A Competition Law and Economics Perspective’

This paper is part of a dissertation at the University of Marburg, and can be accessed  here. While it focuses on developing an economic perspective on the Lundbeck decision, it is fairly similar to the paper reviewed in the post above – except that it concludes that a presumption of illegality of reverse payments in patent settlements, and a safe harbour rule for agreements without reverse payments, should be adopted. The paper is structured as follows: First, it provides an overview of the patent settlement debate in the economics literature. This includes a review of various economics papers and models that identify when and how a reverse payment from the branded drug originator to the generic provider has the ability to delay market entry and, thus, harm consumers through longer periods of monopoly pricing. The whole debate flows from discussions on the probabilistic nature of patents – and was ultimately triggered by Shapiro’s work on how, under a consumer welfare…