Reverse Payment Agreements

Another approach could discourage the withdrawal of payment agreements by transferring the burden of proof of potential damage to producers. Under current legislation, the FTC (or another applicant) must prove in court that reverse payment agreements are harmful to consumers, but that the Preserve Access to Affordable Generics Act would make reverse payment agreements illegal.9 As a result, producers who have been sued by the FTC or private buyers who have entered into a reverse payment deal would have the burden of demonstrating to a court that the benefits of a proposed agreement outweigh the anti-competitive effects. Manufacturers of offending generic drugs and brands could be fined and generic drug manufacturers could lose the 180-day exclusivity period normally granted to the first generic drug on the market. The legislation would not prohibit reverse rate payment agreements, in which the brand manufacturer`s payment to the generic drug manufacturer is limited to reasonable procedural costs, should not exceed $7.5 million, and/or an agreement not to sue the generic drug manufacturer for patent infringement. Last year, the withdrawal of payment agreements in the pharmaceutical industry again posed problems. Since the Supreme Court`s Actavis decision in mid-2013,… While these comparisons remove potential competitors from generics from the market, at least temporarily, the strategy is characterized as abuse of dominance when it “is able to restrict competition and, in particular, have anti-competitive effects that go beyond the specific anti-competitive effects of each of the transaction agreements that are part of this strategy,” the Tribunal said. It has been more than three years since the Supreme Court`s Actavis decision. Since then, numerous alleged class actions, which prejudice competition as a result of reverse payment comparisons, have flooded the courts.

That`s right. The introduction of reverse payments as a means of resolving infringement proceedings has opened up new perspectives for parties to the proceedings in the patent arena. In the Indian context, the use of such a type of settlement of infringement disputes cannot be excluded. Actavis`s decision in the United States may not give full clarity to the case law, but it may provide some significant guidance on the critical points relating to its possible conflict with competition law in India. Delayed entry into the market would give the patent holder a dominant status and undermine the principles of the free market. The patent holder may maintain its product prices on a premium that may run counter to the government`s actions with respect to patients` health needs in order to access affordable drugs. Without addressing the sensitive legal aspects of these agreements, it would be desirable for the patent holder to accept payment of the alleged infringer only in cases where, from a planning point of view, the patent holder considered that a reverse payment could be paid. To do so, the patent holder must use specialized advice to develop a comprehensive procedural plan, to document all stages of the litigation with the costs associated with each step. Such a plan would in fact assist the patent holder in making a well-informed decision not to cancel the amount of prepayment only if the cost of litigation would be much more than reverse payments. In addition, in certain circumstances, reverse payment agreements may face the bottleneck of India`s competition law, which involves additional procedural costs.

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