Generic medicine pay-for-delay deals 'risk breaching EU law'

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Pharmaceutical patent holders that enter into “pay-for-delay” agreements with generic medicine manufacturers risk breaching EU competition law on three counts, an advocate-general to the EU's highest court has said.

According to an report, pay-for-delay deals may constitute agreements that restrict competition by object, restrict competition by effect or breach rules on the abuse of a dominant market position, Juliane Kokott said this in a recent non-binding opinion, in which she considered the circumstances in which pharma patent holders and generic manufacturers can be said to be potential competitors.

Competition law expert Robert Vidal, of Pinsent Masons, said the European Commission would welcome the opinion, but said aspects of it were controversial. “Kokott believes a settlement agreement delaying generic entry can harm competition even if it turns out the generic could never compete to begin with. This does seem to dilute the objective requirement of the test for potential competition and the need to consider the counterfactual. In effect, Kokott regards patent litigation as a form of competition. It will be interesting to see what the CJEU eventually decides,” he said.

Kokott is expected to issue another opinion on similar legal issues in March following an appeal to the CJEU as a result of the European Commission's decision to impose total fines of €146m on Lundbeck and several generic companies for entering 'pay-for-delay' agreements.

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