"Pay-for-delay" agreements are essentially agreements to settle patent disputes between an originator pharmaceutical company (the patentee) on the one hand and a manufacturer of an allegedly patent-infringing, generic version of the patented pharmaceutical on the other hand. These agreements are further characterised by incorporating "a transfer of value" from the patentee to the generic company in return for the generic delaying its entry onto the market.
In the years since 2009, the Commission has been monitoring the use of patent settlement agreements in the pharmaceutical sector as the Commission believes that the use of the "pay-for-delay" agreements is liable to be anti-competitive.
The Commission has also taken action against two originator pharmaceutical companies that it held were using "pay-for-delay" agreements in an effort to prevent or restrict competition in the market for sale of their respective pharmaceuticals: a fine of EUR 93.8 Million was imposed on Lundbeck (citalopram) in 2013, and fines totalling appr. EUR 427 Million were imposed on Servier and a number of generics (perindopril) in 2014. Lundbeck and Servier have appealed against these decisions from the Commission and those appeals are pending. Moreover, the legal situation under US law has become unclear following the United States Supreme Court's ruling in FTC v. Actavis, Inc. in 2013 in which the Supreme Court held that "pay-for-delay" agreements should be subject to review under the "rule of reason" as opposed to the more lenient standard of review considered to apply before that ruling.
Although the legal dust cannot therefore be said to have settled on the question of the lawfulness of "pay-for-delay" agreements in general, the results of the Commission's most recent survey of the use of patent set-tlement agreements (covering the calendar year 2013) show that the number of "pay-for-delay" agreements has dropped significantly. The survey shows a decrease from an average of 22 % of all patent settlements in the period 2000 – 2008 to 8 % in 2013.
Interestingly, the decrease in the use of "pay-for-delay" agreements would not seem to have negatively affected, overall, the ability of parties to patent disputes to reach settlements. Thus, the survey shows 146 patent settlements within the EEA during 2013 as opposed to the much lower annual average of 24 during the period 2000 - 2008.
Horten will continue to monitor developments in this complex and high-risk area of patent and competition law.