Generics UK Ltd and others (C?307/18) - The first pay-for-delay decision of the CJEU
On 30 January 2020, one day before Brexit, the CJEU published its decision on Generics (UK) Ltd and others (C?307/18). The preliminary ruling request was submitted by the UK Competition Appeal Tribunal and is the first decision of the CJEU on a pay-for-delay case.
The case concerns the antidepressant drug paroxetine of GSK. In 1999, the patent protecting paroxetine’s active ingredient expired and three generic manufacturers (IVAX Pharmaceuticals UK, GUK and Alpharma) contemplated generic entry in the UK. However, GSK owned a number of “secondary” process patents and brought patent infringement lawsuits against the generic manufacturers, while the latter challenged the validity of GSK’s process patent referred in the decision as the “Anhydrate patent’. According to the CMA, the generic manufacturers settled their disputes with GSK and agreed to defer their generic entry to the market in return for transfers of value by GSK.
In its decision, the CJEU confirmed that a restriction of competition by object under Article 101(1) TFEU can be established if the transfers of value under the settlement are shown to be sufficient to encourage the generic manufacturers to refrain from entering the market concerned and not to compete on the merits with the originator. Moreover, the CJEU clarified that a finding of restriction by effect does not presuppose: i) establishing the probability that in the absence of that settlement the generic manufacturers would have been successful in the patent infringement proceedings or; ii) that the parties would have concluded a less restrictive settlement.
The CJEU also noted that the generic versions of the originator’s drug must be taken into account for the purposes of product market definition under Article 102 TFEU, provided that the generic manufacturers were in a position to enter the market with sufficient strength and cause a serious counterbalance to the originator’s drug - even if they would not have been able to enter legally the market before the expiry of the surviving process patent. Finally, the CJEU found that concluding settlement agreements may also amount to an abuse of dominance under Article 102 TFEU by an originator, if such settlements have the capacity to restrict competition and have exclusionary effects going beyond these of each settlement.
The full decision can be found here.