Antitrust Law and the Right to Settle: The Case of Pay-for-Delay Settlements

Abstract

In the spring of 2021, pay-for-delay settlements took over the legal scene on the both sides of the Atlantic. In March, following the line of reasoning it had elaborated in Generics, the Court of Justice of the European Union (CJEU) decided Lundbeck. It dismissed the appeals brought against the homonymous decision of the European Commission (EC), which had fined a number of patent settlements in which brand-name drug manufactures had paid generic drug producers to delay their entry in the market of citalopram-based antidepressant medications. A few weeks later, in the US, the Court of Appeals for the Fifth Circuit decided Impax. It affirmed the decision of the Federal Trade Commission (FTC), which, in its first post-Actavis patent settlement case, had fined a generic drug producer for having accepted payments to delay the entry in the market of an opioid named oxymorphone. Meanwhile, some House representatives introduced a new bill on pay-for-delay settlements which has not yet passed.

At first glance, one might be tempted to place these settlements at the heart of the interface between antitrust and patent law. The aforementioned rulings – which, in the United States and the European Union are not anomalous but follow a recent case law – have instead used the case of pay-for-delay settlements to establish when antitrust law should limit firms’ right to settle.

The paper discusses such a shift in perspective.

Keywords: pay-for-delay settlements, US antitrust law, EU competition law

JEL Classification: K21