Source: http://webiis06.mondaq.com/Article/891898
Timestamp: 2020-04-02 20:15:06
Document Index: 54456541

Matched Legal Cases: ['CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ']

CJEU Clarifies Assessment Under Competition Law Of Pay-For-Delay Deals In The Pharmaceutical Sector - Anti-trust/Competition Law - European Union
European Union: CJEU Clarifies Assessment Under Competition Law Of Pay-For-Delay Deals In The Pharmaceutical Sector
The decision of the CJEU largely reflects the Opinion of the Advocate General Kokott issued few days ago and touches upon three main interesting aspects, namely: i) whether originator and generic producers can be considered to be potential competitors where there is a dispute on the validity of the originator's patent and/or the existence of a violation of such patent by the generic drug, ii) whether a settlement agreement can be considered as infringing competition “by object” and iii) whether the same conduct can be said to violate, at the same time, the prohibition of anticompetitive agreements and the prohibition of abuses of dominance.
In the early 2000s, GlaxoSmithKline (GSK) concluded three settlement agreements with three generic manufacturers, each having a short duration (2-3 years). GSK was in fact the originator company of a paroxetine-based drug, whose exclusive protection expired at the end of 2000. By that time, however, GSK had obtained a number of secondary patents allowing it to maintain its position of sole supplier of paroxetine-based drugs in the UK.
During the same period, three generic manufacturers were seeking marketing authorizations in the UK for their generic versions of paroxetine. In this context, a dispute arose between GSK and those three generic manufacturers regarding the latter’s possible violation of GSK’s secondary patents concerning the manufacturing process. Subsequently, GSK and the generic manufacturers entered into agreements, the objective of which was to put an end to the patent disputes and whereby the generic manufacturers agreed – in return for payments by GSK of a certain amount of money – to postpone their entry onto the market for a certain period of time.
The companies then appealed the CMA’s decision before the CAT and it is in this context that a preliminary ruling was submitted asking the CJEU to answer ten questions. With its questions, the CAT essentially wished to understand whether an agreement to settle a medicinal product patent dispute may constitute a restriction of competition by object or by effect, and whether the conclusion of such agreement can also give rise to an abuse of dominant position.
Competitive relationship between the parties to the agreement
For an agreement between companies operating at the same level of the production or distribution chain to be regarded as unlawful, the parties to such agreement must be in competition with each other, if not actually, at least potentially. This is why the first point considered by the CJEU is whether a patent holder and a generic manufacturer not yet in the market may be regarded as potential competitors, where there is an ongoing dispute between the parties regarding the validity of the originator's patent and/or the existence of a violation of such patent by the generic drug.
Following the Advocate General’s Opinion, the CJEU indeed states that a dispute on the validity or infringement of a patent does not prevent the patent holder and the generic manufacturer from being considered as potential competitors. This applies also when an interim injunction has been granted prohibiting a generic manufacturer from entering the market since such injunction does not prejudice the merit of the action especially when it is granted in return for a cross-undertaking in damages agreed by the patent holder (like in the case at hand). The CJEU further points out that the existence of such a dispute between a patent holder and generic manufacturers should actually even be regarded as evidence of the existence of a potential competitive relationship between them.
Anticompetitive nature of the agreement
In assessing whether an agreement akin to the one at issue can amount to a restriction by object, the CJEU first makes clear that a settlement agreement – even when involving a value transfer from the originator manufacturer to a generic producer – cannot be considered, “in all cases,” as a restriction by object.
The assessment of the transfer value (either pecuniary or non-pecuniary) made between the parties is therefore critical for the purposes of evaluating whether the agreement is anticompetitive by object. The CJEU makes clear in that respect that the fact that the transfer of value exceeds the gains that could have been expected by the generic manufacturer if it had been successful in the patent proceedings is irrelevant: all that matters is that such transfer of values proves to be "sufficiently beneficial to encourage the manufacturer of generic medicines to refrain from entering the market concerned."
Originator manufacturer's abuse of dominance
Consistently with the above mentioned analysis regarding the existence of a competitive relationship between the originator drug and its generic versions, which are not yet in the market, the CJEU confirms that such generic versions should be included in the relevant market as long as generic manufacturers are capable of entering the market swiftly and of exercising competitive pressure on the patent holder.