It should be noted that the restrictive effects on competition may be both actual and potential, but must be sufficiently perceptible. The ECJ also noted that in order to determine whether a settlement agreement should be classified as a restriction by effect, it is not necessary for the CAT to conclude that the generic manufacturer would have prevailed in the patent proceedings or that the parties to the settlement agreement would probably have entered into a less restrictive settlement agreement. While California`s attorney general touts it as the largest state settlement ever made for so-called late payment deals, it accounted for only about 6 percent of the $1.1 billion in revenue Provigil generated in 2010. Seemingly low deals like these are not uncommon, according to a Bloomberg Law analysis of litigation from 2013 to 2019. Are settlement agreements restrictions of competition „by object”? The Malaysian Competition Commission („MyCC”) states in the market study on the priority sector under the Competition Act 2010: Pharmaceutical Sector3 that patent agreements between authors and generic manufacturers in other parts of the world may have an impact on the Malaysian market. A typical example is Novartis` patent settlement agreements for imatinib (a successful drug for the treatment of chronic myeloid leukemia sold under the brand name „Gleevec” or „Glivec”). Although in Malaysia, the National Pharmaceutical Regulatory Agency (NPRA) granted marketing authorization for generic imatinib to Cipla Malaysia Sdn. Bhd. and Dr. Reddy`s Laboratories Malaysia Sdn.
Bhd. in August 2017, the two companies did not continue to supply the generics in Malaysia. Similarly, Ranbaxy Laboratories Limited filed a patent application for its generic imatinib in Malaysia on February 15, 2013, but the application was later withdrawn.4 Late payment occurs when a patent owner agrees to compensate a potential or alleged infringer in order not to compete with the patent owner for a period of time. These agreements are also known as „refunds” because payments go in the „wrong” direction, from the patent owner to the infringer (i.e., from the plaintiff to the defendant) and not from the infringer to the patent owner, as is the norm. Late payment occurs most often, if not exclusively, in the pharmaceutical industry when an author of a brand-name drug agrees to pay a generic manufacturer to resolve or avoid a dispute that could invalidate the author`s patent(s) in exchange for the generic`s obligation not to compete with the author`s drug for a certain period of time. In both the EU and the US, competition law is concerned about deferred service agreements, as they can allow patent holders to avoid competition and maintain competitive prices by sharing their monopoly rents with potential competitors to the detriment of consumers. „The application of Actavis standards already deters patent agreements that could delay access to generics and biosimilars,” said Jeffrey K. Francer, Senior Vice President and General Counsel of the Association for Accessible Medicines, an industry group representing generic manufacturers. In addition, the FTC supports the Consumer Access Protection to Generic Medicines Act of 2012, introduced in the U.S. Congress on February 9, 2012, which aims to end the payment of late payment agreements. The new draft law provides that „it is illegal for any person to be a party, directly or indirectly, to an agreement to settle or settle a patent infringement complaint in which: The European Commission further notes that licensing agreements that prevent a generic company from entering the market with its own product or from setting the conditions for the free marketing of its product, constitute an agreement which restricts to a certain extent the placing on the market of generics.
However, an exception applies in cases where royalty-free licenses allow generic manufacturers to market their products without restrictions on the quantities, composition, prices, or other marketing conditions of generics.16 On July 9, President Joe Biden signed an executive order against this practice, arguing that companies use them to avoid competition. keep prices high and stifle innovation. Biden advised the FTC to ban the payment of delays by rule, which would circumvent the need for congressional action. The ECJ considered that a patentee`s overall strategy leading to a patent dispute settlement agreement that at least results in potential competitors being temporarily kept out of the market constitutes an abuse of a dominant position, provided that the strategy is capable of circumventing competition and having predatory effects that go beyond the specific anti-competitive effects of individual agreements. However, the dominant undertaking is free to demonstrate that these predatory effects are outweighed by efficiency benefits for consumers. While settlement agreements are undoubtedly subject to competition law, evaluating an agreement designed to settle a patent dispute for illegal anti-competitive agreements raises a number of fundamental legal issues: late payment is now manifesting itself creatively and „insidiously,” said Sinha, who is also a visiting scholar at the Center for Health Policy at the University of the Northeast University School of Law. Following an in-depth investigation into competition in the pharmaceutical sector in 2008, the European Commission has increasingly focused on patent litigation agreements, with a focus on practices aimed at delaying the entry of generics. The Commission has issued a number of formal `notifications` against pharmaceutical companies, including Servier Laboratories and Lundbeck, in two important cases concerning citalopram, an antidepressant, and perindopril, a cardiovascular medicinal product. Notwithstanding the fact that an agreement may involve a transfer of value (financial or intangible), the CJEU considered that this was not sufficient to qualify the agreement as a restriction by object, as such a transfer of value may be justified as it is proportionate and strictly necessary in view of the legitimate objectives of the parties. On May 10, 2021, the Uk Competition Appeals Tribunal („CAT”) issued its final decision in the GSK (Paroxetine) case – the long-standing saga of late-overdue patent settlement agreements between GSK and several generics. The CAT confirmed the conclusion of the Autorité de la concurrence et des marchés („CMA”) that (…) „Late payment is certainly still ongoing,” said Michael S. .