Exclusion payments in patent settlements: a legal and economic perspective

Legal context. The application of antitrust law to assess settlementsof patent litigation raises difficult issues concerning theappropriate balance of patent law and competition policy. Recentprivate and public invocations of US antitrust law to challengesettlement agreements covering pharmaceutical patents have broughtthese issues to the forefront. The agreements share the commonfeature of an ‘exclusion payment’ from a brand-namedrug manufacturer (the patentee) to a generic drug manufacturer(the accused infringer) in exchange for a promise by the genericcompany to refrain from marketing its product for some time.US federal courts that have examined these agreements have variedin their approach and conclusions regarding the appropriateantitrust analysis to be applied to these settlements. Key points. This article argues that informed antitrust analysisof such agreements must take due note of the ‘probabilistic’nature of patent property rights. Practical significance. The article concludes that exclusionpayments fall outside the scope of a patent's exclusionary scopeand thus are subject to antitrust scrutiny. It demonstratesthat barring anticompetitive exclusion payments in settlementnegotiation prevents collusive bargains that harm consumer welfarewithout discouraging efficient settlements.     

Managing generic competition and patent strategies in the pharmaceutical industry

Legal context: The income streams of originating pharmaceutical manufacturersare under pressure as never before, from increasing R&Dcosts, regulatory pressures, and competition from generic manufacturers.This article examines the various strategies which originatingpharmaceutical manufacturers have adopted in response to thesethreats. Key points: The authors consider various strategies, including SupplementaryProtection Certificates, life-cycle management (‘evergreening’),second pharmaceutical use claims, trade marks, and the use ofdata exclusivity and interim injunctions, in order to prolongthe protection given to existing products, and to manage competitionfrom generic manufacturers. Practical significance: The authors also include two real-life case studies in orderto illustrate the practical applications of the strategies discussedin the article.     

Bitter pill for the pharmaceutical industry

In Case C-431/04 of 4 May 2006 the European Court of Justiceruled that a combination of an active ingredient and an excipientcannot be understood as ‘combination of active substances’in the sense of Article 1(b) of Council Regulation 1768/92 andthus is not entitled to SPC protection.     

New pitfall for the pharmaceutical industry

Legal context This article reviews the Commission decision thatfined AstraZeneca 60 million for abuse of Article 82 EC. Itlooks at the decision in the context of the EU legal frameworkfor pharmaceuticals and considers the legal basis for the Commissiondecision. Key points The article highlights the key points of the allegedabusive practices that do not appear to be consistent with theEU regulatory legal framework and the ECJ jurisprudence in particular,read in conjunction with the principle of commercial freedom. Practical significance The Commission decision (if upheld bythe courts) would have an significant impact on the way thatpharmaceutical companies run their business. This would constitutean unprecedented interference with the principle of commercialfreedom afforded to pharmaceutical companies and specificallyrecognised by the ECJ.     

Antitrust issues in the settlement of pharmaceutical patent disputes, Part II

The settlement of patent disputes in the pharmaceutical industry, and the possible antitrust issues arising therefrom, are of notable concern to the Federal Trade Commission. In this Comment, based on his second speech on the subject, Commissioner Leary re-examines some of this earlier positions under the light of the Commission's further experience with these matters, and provides the industry with some additional objective standards under which it may legally operate. With the Hatch-Waxman Act as a backdrop for patent settlements between manufacturers of patented drugs and potential generic entrants to the market, the Commissioner reviews a variety of scenarios that may or may not be permissible. After initially noting the circumstances of presumptively valid settlements, Commissioner Leary reviews the often complex settlement structures that will be deemed unlawful when and if the finding of reverse payments is evidenced. Finally, the Commissioner concludes with a brief examination of other settlement structures and offers his general views as to their likely legality.     

Challenging pharmaceutical industry political power in Maine and Vermont

A comparison of the Vermont and Maine cases of attempting to control pharmaceutical prices in the year 2000 shows that the Maine legislators were more successful in challenging pharmaceutical industry political power. This comparison shows that challenging the industry was aided by (1) mobilizing public support through grassroots organizations, (2) including independent pharmacists in negotiations over the legislation, and (3) developing state purchasing power leverage.     

TRIPS下药品专利权与公共健康权的冲突和平衡

随着发达国家拥有的药品专利越来越集中,发展中国家因为得不到有效的药品而所遭受的危及公共健康权的疾病越来越多的情况下,TRIPS中的药品专利保护和公共健康权冲突加剧。本文以利益平衡为方法,论述了TRIPS利益保护的失衡以及如何采取措施使其平衡,从而达到有效保护公共健康权的目的。     

AIDS drugs & the pharmaceutical industry: a need for reform.

The pharmaceutical industry has long enjoyed substantial profits despite increased requirements for drug approval and various attempts to regulate the industry. Drug companies have avoided effective regulation by blaming high prices on the costs of research and development. The search for drugs effective in combatting HIV and AIDS related illnesses has provided a stark background on which to view the actions and justifications of drug companies. Despite increased cooperation between government and the drug industry and expedited approval of several useful drugs, these drugs are still prohibitively expensive. This Article explores the history and economics of the drug industry and proposes a system of national price regulation for all drugs.     

An economic analysis of the use of citations in the law

This paper examines the use of citations analysis as an empiricaltool for understanding aspects of the legal system and for improvingthe performance of the system. Emphasis is laid on the use ofsuch analysis as a means to evaluate courts and judges (andtherefore as a judicial-management tool), to test hypothesesabout judicial behavior, and to evaluate and improve legal scholarship.It is argued that economic models, particularly of reputationand of human capital, can frame and guide the use of citationsanalysis in law.     

An economic theory of intentional torts

The topic of intentional torts is, at first glance, an unpromising one for economics. ‘Intent’ is not a normal part of the economist's vocabulary and does not appear to correspond to any concept in economics. Perhaps this is why there is so little economic writing on intentional torts as such.¹ We shall argue, however, that the concept of intentional tort can be given a coherent economic meaning and we shall try to show that the common law treatment of intentional torts can be explained on the hypothesis that the common law attempts to promote efficiency.     

An economic theory of the regulation of preliminary measures

Preliminary measures adopted early in litigation are crucial for plaintiffs, given existing court delays and changing economic environment, but can also harm a blameless defendant. Therefore, some form of regulation is needed to minimize the harms that can result and discard non-optimal measures. Law and economic scholars have suggested that courts should control requests for preliminary measures, but this form of regulation fails to explain existing legislations, both in civil law and common law countries. This article argues that non-optimal preliminary measures can be more efficiently filtered through a strict liability regime, and that their judicial control should be residual.