A Fistful of Euros: EU Competition Policy and Reverse Payments in the Pharmaceutical Industry

Introduction:

"Patent settlement agreements (PSAs) are contracts concluded to put an end to a dispute on the validity or the scope of a patent. Reverse payments or “pay-for-delay” agreements are PSAs which stipulate a payment from the patentee to those who challenge the patent. Patent-intensive industries, such as the pharmaceutical industry, provide fertile ground for these agreements. The recent decisions of the EU Commission in Lundbeck, Johnson & Johnson and Servier have ultimately brought the problematic relation between reverse payments and EU competition policy to the fore.

A vibrant doctrinal and academic debate surrounds reverse payments in the US. Interestingly, this debate was brought to a head by a US Supreme Court judgment issued a couple of days before the Commission’s decision in Lundbeck. An analysis of US antitrust practice demonstrates that the various positions in this debate primarily depend on how, and to what extent, patent law considerations come into play in the antitrust scrutiny. By contrast, the scant EU practice does not clarify how these two policies interact with each other. Bearing this in mind, we put forward an interpretation of EU competition rules—in particular, Article 101 of the Treaty on the Functioning of the European Union (TFEU)—which combines these two policies."