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Impact of Generic Entry on EU Competition Law for End-of-Lifecycle Pharmaceutical Products

This article discusses the impact of generic entry on EU competition law, focusing on the pharmaceutical sector and end-of-lifecycle products. It explores the static and dynamic effects of generic entry, as well as the misuse of the patent system. The article also highlights important legal precedents and recent procedures related to patent settlements and distribution agreements.

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Impact of Generic Entry on EU Competition Law for End-of-Lifecycle Pharmaceutical Products

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  1. LIDCPrague, 12 October 2012 EU competition law and end-of-lifecycle pharmaceutical productsBlaž VišnarDG CompetitionDISCLAIMER“The views expressed are purely those of the writer and may not in any circumstances be regarded as stating an official position of the European Commission.”

  2. Ori-Gen competition Impact of generic entry Staticeffectofunduedelays: average price with and without generic entry

  3. Ori-Gen competition Impact of generic entry Dynamic effects (of undue delay): “Misuse of the patent system potentially reduces the incentive to engage in innovation, since it enables the company in a dominant position to maintain its exclusivity beyond the period envisaged by the legislator” General Court in T-321/05 AstraZeneca, para 367

  4. Pharma Sector Inquiry • opened in January 2008 • main focus of the SI company behaviour in view of generic delay (ORI-GEN) & decline in innovation (ORI-ORI) • preliminary report in November 2008 • Practices in focus: patenting, litigation, agreements (includingsettlements), interventions, follow-on products • ConclusionoftheSectorInquiry in July 2009 • PolicyRecommendations • EnforcementofCompetition Law • ImprovementoftheRegulatory Framework • Regulatory Framework (EU and MS) • TransparencyDirective • EU patent & SinglePatent Judiciary

  5. Commission Enforcement • Important legal precedents: • AstraZeneca: on-going judicial review by the Court of Justice • Recent procedures: • Servier: Patent settlements: Pay for generic delay agreement • Lundbeck: Patent settlements: Pay for generic delay agreement • Cephalon:Patent settlements: Pay for generic delay agreement • Fentanyl: Distribution agreements: Pay for generic delay agreement

  6. The AstraZeneca Judgment Commission Decision 2005 • fining AZ €60 million for abusing its dominant position (Article 102 TFEU) • Market defined as PPI inhibitors (=proton pump inhibitors treating various gastrointestinal diseases, e.g. such as peptic ulcers) • Two abuses delaying generic entry: • misrepresentations to patent offices: Submission of wrong/misleading information in order to obtain prolonged exclusivity (SPC) – duty of transparency for dominant companies • misuse of regulatory procedures: Deregistration of capsules of 1st generation product, required reference product for generic market authorisation; deregistration but not withdrawal/product switchto tablets constituted an abuse. Judgement of General Court 1 July 2010 • essentially upholds Commission Decision (reducing fine to €52 million) • judgment under appeal, AG Mazák opinion 15 May 2012

  7. Statements of Objections issued in July 2012 • Statement of objections – intermediary step in Commission proceedings to establish infringements of Article 101/102 TFEU Lundbeck • generic entry became in principle possible when certain of Lundbeck's citalopram patents had expired • agreements that foresaw substantial value transfers from Lundbeck to its four generic competitors, who subsequently abstained from entering the market with generic citalopram. The value transfers included direct payments from Lundbeck to the generic competitors and also occurred in other forms, such as the purchase of generic citalopram stock for destruction or guaranteed profits in a distribution agreement.

  8. Statements of Objections issued in July 2012 Servier • Servierconsideredto be dominant in the market for perindopril • Acquisitionofscarce competing technologies to produce perindopril, rendering generic market entry more difficult or delayed (Art. 102) • Conclusionof patent settlementswherebyServierinduceditsgenericcompetitors to limit competition to thebenefitofServier's market exclusivity (Art. 101 and 102)

  9. Patent settlements • Third patent settlement monitoring exercise launched January 2012 confirmed trends: • Use of patent settlements on the rise in the EU • Proportion of potentially problematic settlements (restriction and value transfer to generic) remains limited • Review of Technology Transfer BER & Guidelines • May extend to guidance in situations where patent settlements involve licensing

  10. Thank you!

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