Restrictive Practices in the Pharmaceutical Industry: Reverse Payment Agreements Seeking for a Balance between Intellectual Property and Competition Law

Abstract

Reverse payment agreements have attracted the close attention of competition authorities as they are suspected to be the fundamental reason for encumbering competition in the pharmaceutical sector. For more than a decade the U.S. competition and judicial authorities have been scrutinising them, developing specific approaches suitable for their assessment. However, once the practice was deemed to be settled, the Third Circuit questioned this practice employing the new test. In the EU this type of agreement was not in focus until recently, therefore no relevant case law has developed whatsoever. Such uncertainty regarding the possible further developments in the assessment of reverse payment agreements is detrimental to the pharmaceutical industry, as it hinders companies’ ability to adopt their business strategies without the fear of triggering antitrust liability. This article will examine the current status of the reverse payment agreements in both jurisdictions, analyse the application of article 101 TFEU and Section 1 of the Sherman Act along with other relevant legislative provisions, the applied tests and approaches, and specific examples of the agreements decided by the U.S. courts. Such a discussion pursues the practical goal of expanding understanding of what constitutes permitted behaviour for pharmaceutical companies when concluding this type of agreement with a view to avoiding antitrust liability.