Mitchell IP: European Commission hammers pay for delay settlement

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 by James A. Mitchell with notes by Cynthia Price

Legal News

Dec. 11, 2013
Within days of the United States Supreme Court decision in FTC v. Actavis, Inc. finding that pay-for-delay settlements are acceptable if they pass our rule of reason test for determining anti-trust violations, the European Commission assessed $125.6 million in fines against the Danish company, H. Lundbeck A/S, for reverse payment settlements with generic competitors entered into in 2002. Now they have done it again.  European regulators have fined J&J and Novartis 16.3 million Euros (22.4 million dollars) for a pay-to-delay settlement which delayed introduction of a generic pain killer into the Netherlands. 
Notes: The Supreme Court decision in FTC v. Actavis, Inc. was rendered in July of last year. The Federal Trade Commission (FTC) has held that so-called pay-to-delay payments in the pharmaceutical industry, alternatively called reverse payments because they flow from the patent holder to the potential competitor, are a violation of anti-trust law. SCOTUS? did not declare such settlements presumptively illegal, but said that the FTC could bring antitrust action to be considered under the full rule of reason test. The opinion states,  “[T]he likelihood of a reverse payment bringing about anticompetitive effects depends upon its size, its scale in relation to the payor’s anticipated future litigation costs, its independence from other services for which it might represent payment, and... may also vary as among industries.”