Introducing 

Prezi AI.

Your new presentation assistant.

Refine, enhance, and tailor your content, source relevant images, and edit visuals quicker than ever before.

Loading…
Transcript

The Commission's approach

EU

  • "by object" illegality (no proof of actual antitrust injury needed)
  • value transfer element emphasized
  • sensitivity: delay beyond the duration of primary patent
  • no challenger exclusivity (buying off generic competitors to enter before patent expiry is not worthwhile)
  • monitoring reports, classification of settlements (increase in number of settlements, with a lower proportion of B.II type "problematic" ones)
  • doctrinal point of view: patent scope does not immunize from antitrust scrutiny, but practically, COM doesn't reach into the exclusionary zone of the primary patent
  • possible effect of CJEU's Carte bancaire judgment ("by object" illegality applicable only in narrow cases where it is not necessary to examine the effect in view of the high degree of harm caused by the collusion of certain undertakings, taking into account in particular the content, objective and economic and legal context of the agreement)

Landmark cases in Europe

  • Lundbeck (citalopram)
  • molecule patents expired in 2002, process patents still in force
  • negotiated settlements with competitors preparing entry (lump sum and other financial inducements such as guaranteed profits and payments for stocks destroyed)
  • COM's four steps: missed opportunity of generic entry in exchange for payment that would not have been possible with patent enforcement
  • J&J (fentanyl)
  • co-promotion agreement between J&J subsidiary and Sandoz, delay of entry until 2006 (patent expiry: 2005)
  • atypical case: no patent in the way of genetic entry, no litigation
  • Servier (perindopril)
  • COM imposed fines of 427.7 million euros on Servier and five generic companies for a "comprehensive strategy" including settlement deals based on "secondary" patents and licenses of a limited geographical scope
  • abuse of dominant position also asserted (acquired and unused technology)
  • Note: these are administrative decisions by COM, subject to judicial review
  • Servier disputes the narrow relevant market and the value transfer as a basis for antitrust violation (mutual concessions, natural reaction)
  • Lundbeck argues the "scope of the patent" test should be observed and disputes the "by object" illegality treatment of its settlements

Actavis

Dissent

  • complementary relationship of patent law and antitrust law (patent carves out an exception to the applicability of antitrust laws)
  • antitrust issues should only arise if the conduct reaches beyond the patent
  • incentive to settle is substantially impaired by the majority opinion (variety of bargaining chips artificially narrowed down, one dispute leads to another, i.e. antitrust challenge ensues from the patent challenge, with rearranged parties)
  • "good luck to the district court" that must, when faced with a patent settlement, decide patent law questions based on antitrust considerations
  • if a large payment is a proxy for the weakness of a patent, it is also amount to "putting blood in the water where sharks are always near"

The Hatch-Waxman exclusivity (US)

  • Facts and procedural history
  • Solvay NDA for AndroGel in 2000, patent issued in 2003
  • Actavis files ANDA in 2003 for generic version, certifies under para IV
  • Solvay sues Actavis (FDA approves the generic after the 30 fruitless months' stay)
  • Parties settle in 2006: Actavis shall not bring the drug on the market until 2015 (65 months before patent expiry), promotion clause, annual transfer of $$ for 9 years
  • FTC files suit against settling parties, district court dismisses, 11th Cir. affirms, S.Ct. grants certiorari
  • Majority opinion (S.Ct. 2013)
  • undisputed:
  • if patent is valid, drug prices could be high enough to recoup the reverse payment
  • agreement's anticompetitive effects fall within the exclusionary zone of the patent
  • however, these elements do not immunize the agreement from antitrust attack (they are sometimes unlawful)
  • reason: potential invalidity of the patent left untried because of the settlement
  • clear favoring of antitrust over IP, based on the "general procompetitive thrust of the Hatch-Waxman Act"
  • five sets of considerations to deny that patent scope provides safe harbor:
  • (1) remaining uncertainty as to the patent's validity, plus Hatch-Waxman exclusivity delays subsequent challenges
  • (2) anticompetitive evils may be offset by justifications for payments under the rule of reason
  • (3) size of payment is a strong indication of market power (and thus ability to charge higher prices)
  • (4) unexplained large reverse payment shows that the patentee has serious doubts about validity ("workable surrogate for a patent's weakness", administrability argument)
  • (5) possibility to settle without antitrust concerns
  • reverse payment settlements are not presumptively unlawful, but are to be examined under RoR
  • once the FTC established antitrust injury, the weakness of the patent is presumed, but the defendants are precluded from arguing under patent law: their cognizable defenses may only be of an antitrust nature
  • in the context of regulatory marketing authorization
  • (partially) linking subsequent authorization to patent infringement and validity issues
  • limiting the circle of potential challengers (?)
  • reward for the first generic challenger of the patent
  • filing for an ANDA
  • "Paragraph IV certification" (patent is not infringed or invalid)
  • Infringement proceedings (45 days) and statutory stay (30 months)
  • exclusivity
  • if no lawsuit is filed in 45 days or if generic prevails or if the parties settle
  • duration: 6 months (180 days)
  • not proprietary, only a deferred FDA approval for subsequent applicants

Aftermath of Actavis

Predecessors of Actavis

  • Circuit split (resulting in the Supreme Court granting certiorari)
  • "Scope of the patent" doctrine
  • Cipro (Fed. Cir. 2008)
  • settlement with no challenge clause, payment to the generic and generic entry at patent expiry OK
  • patent's exclusionary zone immunizes from antitrust liability
  • reconciliation of antitrust scrutiny and the scope of the patent doctrine
  • "patent is an exception to the general rule against monopolies"
  • presumption of validity (except sham litigation and fraud before the PTO)
  • two qualifying factors: exclusivity has to be relinquished and the generic cannot agree not to market non-infringing versions
  • In re Tamoxifen Citrate Antitrust Litigation (2d Cir. 2005)
  • Schering-Plough v. FTC (11th Cir. 2005)
  • FTC v. Watson (11th Cir. 2012): Actavis prelude, favoring settlements
  • "Quick look" (or per se) illegality
  • K-Dur (3d Cir. 2012)
  • In re Cardizem CD (6th Cir. 2003)
  • Further debates on the implications of Actavis
  • Bold FTC antitrust challenges
  • Non-cash payments
  • In re Effexor XR Antitrust Litigation (D.N.J. 2014)
  • "no authorized generic" commitment
  • In re Lidoderm Antitrust Litigation (N.D.Cal. pending)
  • class action
  • free-of-charge branded products for the generic for resale in exchange for abandoning its challenge and staying out of the market until 2013
  • FTC v. Cephalon (E.D.Pa. 2014) (settled)
  • FTC asserts that patent strength is not even a factor in RoR
  • settlement with Teva in 2005 (not to enter until 2012), patent acquired through fraud on PTO (not a valid defense in any case)
  • reasonableness shall be examined at the settlement date, not at the time of the subsequent finding of invalidity
  • Hatch-Waxman exclusivity not decisive (but probably a factor of RoR)
  • Tilting the balance of antitrust and IP?
  • Weakening patent protection?
  • Discouraging settlements? Discouraging challenges?

USA

Friend or Foe?

Pioneers vs. Generics?

  • Pioneer interests and tools
  • recouping investments with profit margin
  • patent protection and extensions
  • "product lifecycle management" (evergreening, product hopping, procedural moves)
  • launching own generic version
  • Generic interests
  • early market entry
  • avoiding duplication
  • price competition
  • Consumer interests
  • existence of drugs
  • availability of drugs
  • safety of drugs
  • cheaper drugs

A beautiful friendship:

pay-for-delay?

Antitrust issues with pay-for-delay settlements

Make War, Not Love?

  • infringement suit, counterclaim for revocation, settlement
  • payment (from the patentee to the generic)
  • cash payments
  • non-cash payments (purchase of generic stocks, no authorized generic commitment, licenses, etc.)
  • Effexor XR formula (value transfer - avoided litigation costs - value of generic consideration or services = unexplained payment)
  • delay
  • post-patent expiry (but it may be a grey zone with follow-up patents)
  • pre-patent expiry (assumed defeat of the patent)
  • non-temporal restrictions
  • (potential) consideration from the generic apart from delay
  • {Hatch-Waxman exclusivity (US) - delay of others}
  • accompanying measures (e.g. acquiring technology, non-aggression agreements)
  • [reverse] value transfer element
  • "windfall" on the generic side (it could not get it otherwise)
  • sharing monopoly profits

Olivia Beaumont

Conclusions

Presumed illegality or rule of reason?

Alleged antitrust injury

Infringed antitrust rules

  • Antitrust authorities argue for presumptive unlawfulness
  • FTC: "quick look" approach (not per se)
  • COM: "by object" illegality
  • no need to show consumer harm
  • but only after the primary patent has expired
  • US Supreme Court: rule of reason
  • burden of showing anticompetitive threats on FTC, and ample room for defendant to show cognizable efficiencies
  • no decision on the patent's validity, but presuming its "weakness" based on the size of the payment
  • removing generic incentive to compete
  • removing generic incentive to challenge the patent
  • reducing competitive pressure of potential generic entry
  • sharing monopoly rents (instead of driving prices down)
  • consumer harm
  • harm to the health care system
  • may be paired up with exclusionary conduct
  • prolonging monopoly (primary patent expired?)
  • leaving dubious patents unchallenged
  • relationship with patent law?
  • US: patent scope does not protect from antitrust scrutiny
  • "whether the particular restraint lies beyond the limits of patent monopoly is a conclusion that flows from the analysis and not ... its starting point" (S.Ct. in Actavis)
  • EU: unsettled issues, "by object" illegality, ambiguity on the patent scope test
  • tendency to disregard the patent's exclusionary zone and launch antitrust scrutiny even if the settlement allows for generic entry before the expiry of the patent
  • concerns:
  • discouraging settlements
  • potentially more "false positives"
  • holding uncertainty against the patentee despite the presumption of validity (mistrust in patent offices?)
  • weakening of patent protection
  • Sherman Act Section 1
  • FTC Act Section 5
  • TFEU Article 101
  • for comprehensive strategies, even Sherman Act Section 2 or TFEU Article 102

Pay-for-delay Pharma Patent Settlements and Antitrust Scrutiny

Learn more about creating dynamic, engaging presentations with Prezi