ECJ rules for the first time on "pay-for-delay" agreements

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This article highlights important takeaways from the significant preliminary ruling of the European Court of Justice (ECJ) in the UK Paroxetine case, handed down on 30 January 2020. The ECJ had been asked by the UK Competition Appeal Tribunal to clarify the criteria governing whether so-called “pay-for-delay” agreements entered into between originator and generic pharmaceutical companies fall foul of EU competition law rules. Such agreements are a form of patent dispute settlement, whereby in return for a value transfer, a generic manufacturer acknowledges the patent of the originator pharmaceutical company, and agrees to refrain from marketing its generic version of the drug in question for a specified period of time. Pay-for-delay agreements have been in the spotlight of the European Commission and national competition authorities for over a decade, but this was the first time the ECJ had ruled on this issue. In this briefing, we explore the significant implications which the ECJ’s judgment is expected to have for both ongoing and future cases in the pharmaceutical sector.