Roman Sinichkin /
20 September 2016Americas

AIPPI 2016: Pay-for-delay deals come in for scrutiny

Pharmaceutical pay-for-delay deals worth less than around $10 million are unlikely to be challenged by the authorities in US courts, according to a speaker at the 2016 AIPPI World Congress in Milan.

Michael Carrier, of Rutgers University School of Law, was discussing a number of settlement scenarios between brand owners and generic companies during a discussion yesterday, September 19, with Yoichi Okumura, general manager of intellectual property at Takeda, and Gabriella Muscolo, commissioner at the Italian Antitrust Authority.

The $10 million assertion referred to a payment after a patent owner and generic have settled litigation. With the generic agreeing not to launch its drug until patent protection has expired, the patent owner pays the company in return, with fees as high as $100 million.

Carrier said that because courts won’t have assessed validity and infringement, if there is a large and unjustified payment then “that’s a proxy for the patent’s invalidity”.

The panel also looked at so-called early entry deals, giving the example of a brand and generic settling litigation with the patent due to expire in two years. The patentee’s profits from exclusivity equal $100 million a year.

In scenario A, the generic is allowed to enter the market six months before patent expiry and is paid $50 million (six months’ worth of the patentee’s profit). Scenario B dictates that the generic can launch a year ahead of expiry but is paid nothing.

Carrier said scenario B would be allowed in the US but that A would be a problem.

The panel also looked at a third situation, called non-cash value transfers. After a brand and generic settle litigation in one country (X), the generic could receive a licence to enter the market (option A), or the generic can enter the market six months before patent expiry and the patent owner will not launch an authorised generic until expiry (option B).

Under option C, the generic agrees not to launch in country X but is allowed to launch in country Y.

Okumura, speaking in a personal capacity, said case A (the licence) is rare but that Takeda has done this type of licensing before.

“I don’t believe it’s a problem—you’re facilitating the entry of the generic to market,” he said.

He added that B and C are tricky and complicated, and that “sometimes generics are so creative that they propose a unique strategy for the settlement”, which can include deals such as B and C.

The 2016 AIPPI World Congress ends today.

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