Adding a New Dimension to EU Pharmaceutical Antitrust - Pay for Delay Settlements as Part of a Unilateral Strategy such as Product Hopping

By Gallasch, S.

Striking the right balance between protection competition law and intellectual property rights is of utmost importance, especially in the pharmaceutical sector; affordable generic drugs are as important as new innovative drugs. Pay for delay settlements take place at exactly this intersection. They end patent infringement litigation but, at the same time, delay entry of generic drugs by means of a substantial payment from the brand company to the generic. Whereas, the US Supreme Court opted for a rule of reason approach which requires an analysis of the potential anticompetitive effects, the European Commission regarded such settlements as restriction by object, finding an infringement without the need for an effects-based analysis. This approach is criticised and a novel “structured effects-based” approach is proposed allowing the authority to effectively scrutinise such settlements while striking the right balance in order to protect the innovative process and the exercise of intellectual property rights.