The Lundbeck Case and the concept of potential competition

Posted by Social Science Research Network

The Lundbeck Case and the concept of potential competition

By Sandra Marco Colino (The Chinese University of Hong Kong), Niamh Dunne (King’s College London), Knut Fournier (Leiden University), Sofia Pais (Catholic University of Portugal) &  Derek Ritzmann (Compass Lexecon)

Abstract:     Antitrust rules have been brought into play in situations whereby a company tries to prevent, or at least delay, the entry into the market of potential competitors. This issue has become strikingly prominent in the context of patents and intellectual property (IP) rights in the pharmaceutical industry. Patent holders of a drug, or drug originators, sometimes enter into a ‘reverse payment agreement’ with generics manufacturers, which involves paying the latter to settle prospective patent litigation. The sum agreed might also cover delaying the entry of the generic version of the drug into the market (‘pay-for-delay’ settlement). Delaying the entry of would-be competitors would almost certainly entail pushing back the benefits typically derived from a competitive market, the very ones that competition law was designed to protect. And yet the fact remains that, when reverse payment agreements are entered into, the generics manufacturers are not actual competitors of the patent holder. Unless they infringe the IP rights of the originator, the generic version of the drug will only hit the market once the basic patent is no longer in for…

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