'Pay for Delay': Legitimate Conduct to Defend Valid Patent Rights or Anticompetitive Behaviour?
41 Pages Posted: 8 Jul 2019
Date Written: September 1, 2017
Originator and generic drug manufacturers frequently settle patent litigation on terms that include a payment to the generic manufacturer in return for the generic to delay entry into the market. These reverse-payment settlements extend the originator’s market exclusivity and can amount to anticompetitive divisions of the market. Proponents of such settlements emphasise the reverse-payment as legitimate business rationale in response to the risks associated with litigation. While reverse-payment settlements have raised considerable debate in the pharmaceutical field in both the United States and the European Union, competition authorities in New Zealand are yet to address this issue. Against this background, this paper seeks to analyse the compatibility of such settlements under New Zealand competition law, in particular the applicability of section 27 and section 36 of the Commerce Act 1986. Given the variability of such agreements, it is unclear whether New Zealand competition law is adequate to curtail reverse-payment settlements.
Keywords: Commerce Act 1986, Section 27; Section 36; Reverse-Payment Settlements; Pharmaceutical; Anticompetitive; Patent Settlement
JEL Classification: K00
Suggested Citation: Suggested Citation