Wednesday 18 December 2013

Pay-for-delay: a new article and a couple of questions

"Pay-For-Delay Practices in the Pharmaceutical Sector: Lundbeck, Actavis, and Others" by William Choi, Bruce Den Uyl and Mat Hughes, has just been published in the Journal of European Competition Law & Practice (2014) 5 (1): 44-52. According to the abstract:
"It is straightforward to set out an economic model in which pay-for-delay settlements may lead to monopoly profit sharing, so as to prevent entry and to keep prices high; 
The U.S. Supreme Court's and the European Commission's guidance appears to differ in that regard, with the U.S. Supreme Court focusing primarily on the size of the payment and whether it has a legitimate justification; 
In some circumstances, banning pay-for-delay may reduce the scope for settlements to be agreed and, somewhat paradoxically, delay market entry by generics firms".
This blogger has long been fascinated by the concept of pay-for-delay and has wondered why, so far as he can tell, this phenomenon has not spread beyond the pharma patent sector and into markets that are less emotive and public policy-driven.  Also, given the relatively short life of patents, any harmful effects of such payments -- assuming that they are harmful -- are presumably going to be of pretty short duration anyway.  Can anyone explain

1 comment:

Anonymous said...

I know little about this area, but in response to your question about why this is restricted to pharma patents, perhaps it's because individual patents in that sector can be very valuable (protecting sales of hundreds of millions of dollars annually) and pay-for-delay settlements will stop a party taking action to get the patent revoked. Other sectors will rarely have individual patents that are so valuable that it's worth buying off potential attackers of the patents.