Pay-for-delay-agreements in the Pharmaceutical Sector

Jakob Kongstad

Student thesis: Master thesis


The purpose of this thesis is to examine the legal status of pay-for-delay-agreements in the pharmaceutical sector within the area of competition law in EU. The problem stems from the conflicting views in the intersection of Intellectual Property Law and Competition Law, thus why Pay-for-delay-agreements are a highly debated antitrust topic right now Pay-for-delay-agreements arise in patent settlements in which an originator (the patent holder) provides compensation to a generic manufacturer (the patent infringer), and in return get the generic manufacturer to delay or refrain from entering the market. Such an agreement might involve antitrust limitations, where parties agree upon sharing the monopoly profit rather than competing. Consequently, pay-for-delay agreements can result into higher market prices, which in turn will harm the consumer welfare. In 2009, The EU Commission enacted a sector report, which investigated the alleged obstacles in the industry. In particular, the findings of the report were related to patent settlements in which an originator makes a lump sum to a generic manufacturer. Some years later, The European Commission opened their first cases against J&J, Lundbeck and Servier, all with the same result, identifying them as an infringement by object without the need for an effect-based analysis. Thus, this thesis examines whether this kind of agreements in general should be treated as restriction by object. First, the thesis presents different methods for identifying an object infringement in relation to recent development in case law. Secondly, whether The EU Commission’s object restrictions within pay-for-delay agreements can be justified taking recent development in the case law into account. Comparing with the case law in the United States, the thesis then discusses if a similar approach should be applied in Europe. The economic part subsequently designs an analytical framework, which evaluates the competitive effects of pay-for-delay-agreements. The analysis reveals that under certain circumstances, a pay-for-delay-agreement might benefit the consumer welfare. While continued scrutiny on pay-for-delay-agreements is of critical importance, broad interpretations of such agreements are inappropriate. Hence, more case- by-case investigations and in-depth analysis would determine the harm more accurately.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
Publication date2016
Number of pages89