‘AstraZeneca 2.0 – A unilateral pay for delay story’

The CCP seminar series continues on Friday 8th May with the inimitable Sven Gallasch (CCP and LAW) presenting his research on ‘AstraZeneca 2.0 – A unilateral pay for delay story‘. Sven is a Lecturer in Law at the UEA Law School. His main research interests lie in the intersection of competition law and intellectual property rights. An abstract for his paper can be found below.

Abstract

Agreements in the pharmaceutical sector by which the brand pharmaceutical company pays the generic entrant to stay off the market as part of a patent settlement, so-called pay for delay settlements, are currently at the centre of attention of the European Commission at the moment, with decisions against Lundbeck and Johnson & Johnson and Servier. Predominately, the European Commission’s current enforcement efforts so far rest on Art. 101 TFEU, similar to the longstanding enforcement against these types of agreements in the United States. The antitrust scrutiny in the United States is based on the fact that a pay for delay settlement between a brand company and a single generic company can foreclose the entire market concerned.

In Europe, however, actual market foreclosure based on the pay for delay settlement itself is only possible in a small number of cases and only with very limited anticompetitive potential compared to the situation in the United States. This reduced anticompetitive potential arises from the differences in the European regulatory framework, which does not block subsequent generic entrants despite the conclusion of a pay for delay settlement in the market.

However, it would be misleading to think that pay for delay settlements have no anticompetitive potential in Europe. This article aims to extend the common understanding of the anticompetitive nature of pay for delay settlements in Europe. It argues that the brand company can cause significant consumer harm by using pay for delay settlements as a means to achieve broader unilateral anticompetitive conduct, such as product hopping, akin to the second abuse in the AstraZeneca judgment.

The seminar takes place from 13:00-14:00 in the Thomas Paine Study Centre, Room 0.1.

‘Entry limiting agreements for pharmaceuticals: pay-to-delay and authorized generic deals’

The CCP seminar series returns from its Easter break on Friday 17th April. And to kick things off, we have with us the masterful Farasat Bokhari (CCP & ECO) presenting his latest paper entitled, ‘Entry limiting agreements for pharmaceuticals: pay-to-delay and authorized generic deals‘. Farasat is an Associate Professor in the School of Economics at the University of East Anglia. His research specialties lie in health economics, as well as a background in applied microeconomics and industrial organisation. An abstract for his paper can be found below.

Launching of authorized generic products and/or paying off a generic challenger, via a pay-to-delay deal, are two of the more contentious moves by R\&D active drug manufacturers to protect their patented drugs against independent generic entry. Pay-to-delay deals involve a payment from a branded drug manufacturer to a generic maker to delay market entry where, in return for withdrawing the challenge, the generic firm receives a payment and/or an authorized licensed entry at a later date but before the expiration of the patent itself.  In this paper we focus on the incentives involved in reaching such deals and why they are stable. We combine the first mover advantage (for the first generic entrant) with the ability of the branded manufacturer to launch an authorized generic, and describe the conditions under which pay-to-delay deals are an equilibrium outcome.  Our model makes explicit the conditions under which authorized generic launch by a branded firm is a credible threat to later potential generic challengers and works as a device that enables the pay-to delay deal with the first challenger.

The seminar will be held from 13:00-14:00 in the Thomas Paine Study Centre (TPSC), Room 1.03.

‘Product differentiation and non-linear pricing: strategies for growth in the UK pharmaceutical market’

The CCP seminar series continues on Friday 5th December, with pharma maestro Farasat Bokhari (CCP and ECO) presenting his research on ‘Product differentiation and non-linear pricing: strategies for growth in the UK pharmaceutical market‘. Farasat is an Associate Professor in the School of Economics and specialises in health economics, with a background in applied microeconomics and industrial organisation. An abstract for his paper can be found below.

Abstract

This paper develops a stylized model to specify conditions for menu pricing and product differentiation as profitable strategies in a monopoly or duopoly market structure. We then empirically compare the effect of these strategies within the growth of firm literature. To this end, we use a quarterly panel dataset on the UK pharmaceutical market for the period Q2 2003 – Q1 2013 to estimate the impact of new product forms and package varieties on business unit. Using a dynamic lag-adjustment model as econometric framework, findings from this study suggest that a new product form leads to 18% growth in the long run, while a new package variety leads to 7% growth. Furthermore, in terms of growth, small and midsize firms benefit from these introductions far more than the larger firms.

The seminar takes place from 13:00-14:00 in the Thomas Paine Study Centre, Room 1.03.

‘What Is “Exceptional” About Pharma? An Analysis of Recent EU Competition Policy’

Following on from our special midweek seminar, we are delighted to welcome Margaret Kyle (Toulouse School of Economics) as our guest at the Centre. On Friday 7th February, Margaret will be asking ‘What is “Exceptional” about Pharma? An Analysis of Recent EU Competition Policy‘. An abstract for Margaret’s seminar can be found below.

Abstract

As in most innovative sectors, balancing the incentives created by intellectual property rights with the static costs of market power is a challenge for competition authorities. I examine two areas in the pharmaceutical sector that have received considerable attention in recent years: patent thickets and associated responses, such as “pay for delay” and authorized generics, and reactions to parallel trade. I argue that patent settlements in pharmaceuticals should not be treated exceptionally, as they are very similar to settlements in other innovative industries. Rather than prohibiting all such settlements, antitrust authorities must assess the potential anticompetitive effects of each individual case. In contrast, the pharmaceutical sector does merit exceptional treatment in the case of parallel trade. Unlike other products, drugs face national-level price controls throughout the European Union. Such policies are inconsistent with the existence of a common European market, and parallel trade is an inefficient and inappropriate means of achieving the dubious goal of a common EU price.

The seminar will take place from 13:00-14:00 in the Thomas Paine Study Centre, Room 1.1.

‘The US Supreme Court’s Actavis judgment on reverse payment settlements – should Europe head the same way?’

The CCP’s Autumn seminar series continues this Friday with the inimitable Sven Gallasch (CCP and LAW) presenting his research entitled ‘The US Supreme Court’s Actavis judgment on reverse payment settlements – should Europe head the same way?‘. An abstract for his seminar can be found below.

Abstract

The US Federal Trade Commission has fought against reverse payment settlements in the US pharmaceutical sector for over a decade. On June 17 of this year, the FTC won a probably decisive battle in front of the US Supreme Court. The Court sided with the FTC in finding that reverse payment settlements should be put under antitrust scrutiny and also set out the relevant test to be applied by the lower courts.

Europe however is trailing behind the US authorities and jurisprudence with regards to reverse payment settlements. On the very same day of the Supreme Court’s decision, the European Commission issued its very first decision concerning reverse payment settlements against Lundbeck and a number of generic companies, without having set out its approach to this kind of settlement in public.

I therefore discuss the possibility of applying the US Supreme Court’s Actavis rule, or at least the underlying rationale, in the European context. Informed by this decision, I have developed a legal test that takes the peculiarities of the European pharmaceutical sector into consideration and avoids the most controversial issue – namely the assessment of patent validity by the European Commission.

The seminar takes place from 13:00-14:00 in the Thomas Paine Study Centre, Room 1.4.

Policy Brief: What is the price of pay-to-delay deals?

BACKGROUND

  • A pay-to-delay deal (or ‘reverse payment’) involves a payment from a branded drug manufacturer to a generic manufacturer to delay market entry.
  • Pay-to-delay deals are on the rise on both sides of the Atlantic.
  • According to the Federal Trade Commission, pay-to-delay deals stifle competition from lower-cost generic medicines and have cost US consumers on average $3.5 billion per year. Read more of this post