The Global Reach of FTC v. Actavis – Will Europe Differ from the US Approach to Pay-for-Delay Agreements?
IIC (2014) 45: 128. doi: 10.1007/s40319-014-0160-8
31 Pages Posted: 4 May 2018
Date Written: March 1, 2014
Reverse payment agreements between patent-holding drug companies and their generic competitors have raised a conflict between patent law and competition law policies that is difficult to reconcile. The US Supreme Court decision in FTC v. Actavis is the first high court decision to have ruled on these agreements, adopting a rule-of-reason approach that favored the objectives of competition law over those of patent law. However, the decision fell short of providing a clear, workable test for the lower US courts, meaning that the practical impact of the decision remains unknown. Meanwhile, the European Commission and other European jurisdictions are actively pursuing their own investigations into these agreements. The extent to which other jurisdictions will converge with or depart from the US approach under Actavis is explored in this article. We first discuss the origins of reverse payment agreements, starting with the regulatory framework of the US Hatch-Waxman Act, and then consider the US case law, including an analysis of the FTC v. Actavis ruling. We then discuss the ongoing European investigations, focusing on the EU and the European Commission’s announcement of fines in the Lundbeck case. We discuss the ways in which the EU and other jurisdictions might depart from or converge with the US approach reflected in Actavis, in practice and in principle. Ultimately, we argue that European jurisdictions will share the Supreme Court’s view that antitrust objectives should take precedence over patent law objectives when it comes to reverse payment settlements. However, European jurisdictions are likely to rely on a more categorical legal framework than the US rule of reason.
Keywords: reverse payment, pay for delay, patent settlements, Lundbeck, Actavis, pharmaceutical
JEL Classification: K21, L40
Suggested Citation: Suggested Citation