David Bailey ‘The New Frontiers of Article 102 TFEU: antitrust imperialism or judicious intervention?’ (2018) Journal of Antitrust Enforcement 6(1) 25-53

This paper – which can be found here – addresses the way in which EU competition law cuts across and interferes with other legal regimes such as pharmaceutical regulations (Astra Zeneca and patent settlement cases), energy rules (Gazprom) and data protection (Facebook). This has led to a debate about whether EU competition law and policy should be able to trespass on turf that is properly subject to other areas of law, and whether it is appropriate for it to act as a “repair service” for other fields of economic law that lack sanctioning mechanisms. The article is structured as follows: The second section examines four situations in which Article 102 TFEU controversially overlapped with a different area of law. Competition law applies to unilateral business conduct whenever there is an act (or omission) of a dominant undertaking that distorts the competitive process or is directly exploitative of consumers. On the other hand, the application of competition law is usually precluded by…

The CAT’s Paroxetine decision (Paroxetine GSK v CMA [2018] CAT 4)

This post contains a fairly long discussion, so those who are familiar with the case may want to skip it. This decision – which can be found here – concerns  a pay for delay case and identifies a number of interesting questions regarding this type of conduct – some of which were referred to the Court of Justice of the European Union (CJEU). I do not propose to summarise the decision (it is 180 pages long). Instead, I will merely review the parts that I found most interesting. In particular, the judgment contains a very clear discussion of how the law stands as regards pay-for delay agreements in Europe. It also reviews EU law, particularly in the context of the Tribunal’s decision to make a preliminary reference to the CJEU. These questions flow mostly from the debate, apparent in my earlier posts, regarding whether pay-for-delay agreements should be treated as restrictions by object or by effect under EU law following…

Chris Fonteijn, Ilan Akker and Wolf Sauter  ‘Reconciling competition and IP law: the case of patented pharmaceuticals and dominance abuse’,  in Gabriella Muscolo and Mariaanna Tavassi (eds.) The Interplay between Competition Law and Intellectual Property – An international perspective (Kluwer Law International, Forthcoming)

The paper – a draft of which can be found here – discusses how competition law may be applied with regard to abuses of dominance involving patented pharmaceuticals. It argues that the pay for delay cases in both the US and the EU are only the first step in exploring the application of competition law to such products. The paper then examines abuses of the patent system with the aim to exclude competitors and, second, whether excessive prices can be sanctioned as regards IP-protected pharmaceutical products. The paper is structured as follows: Section II investigates the interaction between IP and competition law. This has been covered extensively in previous emails, so I will merely summarise the basic points. Inasmuch as IP law creates temporary monopolies, this would seem to create a tension with competition law, but this tension is merely apparent. Both competition and IP law ultimately seek to promote consumer welfare, and the protection granted by IP law does not amount…

Elisabetta Maria Lanza and Paola Roberta Sfasciotti ‘Excessive Price Abuses: The Italian Aspen Case’ (2018) Journal of European Competition Law & Practice 9(6) 382

This paper – which can be found here – is of particular interest because the authors were the case handlers in this case, which is one of the (very) few recent cases on excessive pricing. The paper begins with a discussion of why enforcement against excessive pricing is frowned upon by competition agencies (and absolutely discarded in the US). First, there may be a negative impact on investment caused by limits to a company’s freedom to set prices, which may limit its ability to recover capital invested in research. Second, in normal conditions regulatory intervention is unnecessary: the market will self-correct, because excessive prices will stimulate the entry of competitors into the market. Third, as a rule competition authorities seek to avoid having to decide what is the ‘correct’ or ‘fair’ price, since this would require a judgement which is closer to the competences of a sectoral regulator. Fourth, the analysis of situations of excessive pricing faces significant difficulties in…

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…

Sven Gallasch ‘Activating Actavis in Europe – the proposal of a ‘structured effects-based’ analysis for pay for delay agreements’ (2016) Legal Studies 36(4) 683

This article – which can be found here – criticises the adoption of a ‘by-object’ approach in the EU for pay-for-delay agreements, and argues that Europe should instead adopt a test along the lines of the rule of reason approach delineated by the US Supreme Court’s decision in Actavis. This paper is structured as follows: Section 2 compares the EU and US regulatory frameworks. While broadly consistent with the papers above, this paper emphasises two points which merit attention. First, it is pointed out that the existence of a period of exclusivity for the first generic entry can, when coupled with the possibility of the generic supplier settling a patent validity claim with the branded drug originator, skew the incentives of the parties in favour of settlement to the disadvantage of final consumers. Instead of solving the patent dispute in court, the parties settle their dispute. The generic company is nonetheless granted the 180 days of generic exclusivity. The parties…

Michael A. Carrier and Carl J. Minniti III ‘Biologics: The New Antitrust Frontier’ (2018) University of Illinois Law Review 1

This paper – which can be found here – can be read together with the paper on biologics that was reviewed here. Biologics differ from small-molecule drugs along multiple axes. They are more expensive, costing hundreds of millions of dollars to develop. They also cannot be precisely replicated. As a result, they are likely to present different challenges than chemical generics. This article develops an antitrust framework for the problematic conducts most likely to arise. Part I provides a primer on biologics, offering a brief history before focusing on the relevant science and markets. In a nutshell, the pharmaceutical industry consists of small-molecule drugs and biologics. A biologic is a large, complex molecule derived from a living organism, most commonly a protein. Through an intricate manufacturing process, biologics are harvested in genetically modified cell lines and purified through complex, lengthy procedures. For most of the twentieth century, innovation resulted in small-molecule therapies in the form of compounds produced through chemical synthesis, up…

Michael A. Carrier ‘Sharing, Samples, and Generics: An Antitrust Framework’ (2017) Cornell Law Review 103(1) 1

This paper – which you can find here – looks at a specific type of obstacle to generic entry: refusals by originators to share samples of branded medicines. As is often the case in this sector, this practice takes advantage of the existing regulatory scheme, in this case in the US. This strategy involves risk-management programs known as Risk Evaluation and Mitigation Strategies (“REMS”). Pursuant to legislation, REMS are required when a drug’s risks (such as death or injury) outweigh its rewards. According to the author, brands have used this regime, intended to bring drugs to the market, to block generic competition. The paper is structured as follows: Part I provides a background on REMS, offering a history and overview of these programs before examining the concerns they raise regarding blocking generic entry. The FDA has defined REMS as “required risk management plans that use risk minimization strategies beyond the professional labeling to ensure that the benefits of certain prescription drugs outweigh…

Farasat Bokhari, Franco Mariuzzo and Arnold Polanski ‘Entry limiting agreements for pharmaceuticals: pay-for-delay and authorized generic deals’

This paper – which can be found here –  focuses on the incentives to enter into pay for delay agreements. A pay-for-delay deal involves a `reverse payment’ from a patent holder to a generic manufacturer (the challenger) seeking entry for its generic equivalent. In return for the payment, the generic firm may abandon its challenge, but often also acquires a right from the patent holder to enter the market at a later date, but before the patent expiration, as an authorized licensed generic with an exclusive license. The question is then, if the originator can pay the generic producer to refrain from challenging its patent and to stay out of the market for some time, how much do they have to pay, and why do other generic challengers not grab the same opportunity to also get paid off? The paper’s second section discusses the relevant literature. Section three develops a stylized game between a branded firm and several challengers seeking entry….