CJEU On The Assessment In Terms Of Antitrust Law Of Pay-For-Delay Agreements Between The Holder Of Pharmaceutical Patents And The Manufacturers Of Generic Medicines – Generics (GB), GSK Et Al. vs. Competition And Markets Authority

CJEU, judgment dated January 30, 2020 - Case C-307/18

According to the CJEU, pay-for-delay agreements between the holder of pharmaceutical patents and manufacturers of generic medicines have the object of restricting competition and, thus, violate Art. 101 TFEU if the assets transferred to the manufacturers of generic medicines do not have any explanation other than omitted competition and the agreement is not proven to promote competition. In spite of an existing patent protection, a relationship of potential competition may exist between the parties.

Furthermore, the conclusion of several pay-for-delay agreements may constitute an abuse of a dominant market position pursuant to Art. 102 TFEU if the effects restricting competition that result from such agreements exceed those of the individual agreements. In addition to the originator medicine, generic medicines are also part of the relevant product market, even if they could not legally enter the market before the patents expire, as long as it is possible for the manufacturers of generic medicines to quickly enter the market with sufficient strength to be a serious counterbalance.

Facts of the case

The British Competition and Markets Authority considered settlement agreements which the pharma company and manufacturer of originator medicines GlaxoSmithKline (GSK) had concluded with several manufacturers of generic medicines to violate competition law. GSK held a patent for an ingredient of the anti-depressant Paroxetin and several secondary patents which protect processes for the manufacture of that ingredient. After GSK's main patent and document protection had expired, several manufacturers of generic medicines obtained a marketing authorization for a generic version of Paroxetin in various EU member states. GSK proceeded against these companies based on secondary patents still valid at that time; in response, corresponding nullity complaints were filed. These disputes were settled by the following three settlement agreements:

An agreement with IVAX, a manufacturer of generic medicines, under which IVAX received the exclusive right of distributing a maximum volume of authorized generic medicines in Great Britain and an annual remuneration. Two separate settlements with GUK and Alpharma, under which GSK undertook, inter alia, to buy the entire stock of generic medicines intended for Great Britain and pay for half of the legal cost incurred by GUK/Alpharma as well as an annual/monthly remuneration. In exchange, GUK and Alpharma undertook to sign a sub-distribution agreement with IVAX, including an indexed price and undertook to not distribute any generic medicines in Great Britain as long as the supply agreement between IVAX and GUK is valid. Referrals to the Court of Justice of the European Union

The British appellate instance for decisions by antitrust authorities1 referred the following questions to the CJEU for a preliminary ruling (abridged):

Does a relationship of potential competition exist between the holder of a pharma patent and manufacturers of generic medicines intending to enter the market? Is the restriction on competition...