Study Of Antitrust Review To Reverse Payment Settlements

Reverse payment settlements,also known as pay-for-delay agreements,refer to brand name drug manufacturers and generic drug manufacturers reach settlements in patent infringement litigation.The contents of the settlements including brand name drug manufacturers give a certain value to generic manufacturers,as a consideration,generic drug manufacturers postpone to market their generic drugs.The rise of reverse payment settlements is mainly due to the enactment of the Hatch-Wawnan act,which includes the exception of Bolar,the abbreviated new drug application,and the 180-day market exclusivity that facilitate the occurrence of the reverse payment settlements.The United States Circuit Courts have adopted different review rules to conduct antitrust review to reverse payment settlements,including per se rule,scope of the patent test rule,” quick look” rule of reason,rule of reason.The General Court of the European Union using the presumption of illegal rule concluded the first case of reverse payment settlements in September,2016.According to the status quo of China drugs,generic drug registration system and the existing patent law,China has the possibility of reaching reverse payment settlements.China should adopt rule of reason,not adopt per se rule or scope of the patent test rule to review reverse payment settlements.The first part of the article introduces the related concept of reverse payment settlements and the main contents of the Hatch-Wawnan act.Brand name drug should be translated into Yuan Yan Yao in Chinese and generic drug should be translated into Fang Zhi Yao in Chinese,so more accurate,and consistent with the words of “Provisions for Drug Registration” of China.The Hatch-Wawnan act rules the exception of Bolar,the abbreviated new drug application,and the 180-day market exclusivity.The exception of Bolar refers to producing,using or importing patented medicine or patented medicinal equipment for the purpose of providing the information as required for administrative examination and approval,and producing and importing the patented medicine or patented medicinal equipment exclusively for the said purpose shall not be deemed an infringement upon a patent right;the abbreviated new drug application means that only generic drugs and brand name drugs have the same bioequivalence,to ensure its safety and effectiveness,then the generic drug can be directly approved by the FDA;the 180-day market exclusivity means the first generic drug manufacturers certifying the of 21 U.S.C.§355(j)(5)(A)(vii)(IV)can obtain 180-day market exclusivity,that is,within the time limited,the FDA will not approve other generic applications.Not onlyis reverse payment far less than the monopoly profits of the patent,but also not appear one after another generic drug manufacturers to challenge the brand namedrug patent.So after the enactment of the Hatch-Wawnan act,many reverse payment settlements are reached.The second part of the article introduces the rules used to review the reverse payment settlements in European and American judicial practice.In the United States,the FTC has filed a number of litigation against the reverse payment settlements,which argued that such agreements violate the antitrust law and make consumers suffer huge losses due to high drug price each year.Which rule should be used to review such agreements,the United States courts have different opinions.The United States Sixth Circuit adopted per se rule,concluding that such settlements unlawfully restrict competition,in violation of the "Sherman law." The Second Circuit Court,the 11 th Circuit Court and the Federal Circuit adopted scope of the patent test rule,concluding that such settlements restrict the import of generic drugs into market without exceeding the scope of the patent exclusivity and the reverse payment is based on litigation cost and time saved,so reverse payment settlements are not illegal.The Third Circuit,adopted the "quick look" rule of reason,concluding that such settlements should be deemed presumption of illegal,unless the defendant can prove that the reverse payment is conducive to promote competition or not to delay the sale of generic drugs.The Supreme Court held that rule of reason should be adopted.Even if the contents of the settlements were within the scope of the patent exclusivity,the exemption of the anti-monopoly law could not of course be obtained.Whether the settlements are illegal or not,should consider the size of the reverse payment,its scale in relation to the payor's anticipated future litigation costs,its independence from other services for which it might represent payment,and the lack of any other convincing justification.The European Commission considers that if the reverse payment does not have reasonable grounds and delays the sale of generic drugs,it should be presumed to be illegal.The EU General Court adopted the presumption of illegal rule to judge the first case of EU reverse payment settlements,supporting the European Commission's punishment decision.It held that the reverse payment settlement between brand name drug manufacturer and generic drug manufacturer irrelevant with the patent dispute,was a "a buying-off of competition",in violation of the TFEU Article 101 prohibiting the damage to free competition.The third part of the article introduces the strategy of China facing the reverse payment settlements.According to the status quo of China drugs,generic drug registration system and the existing patent law,China has the possibility of reaching reverse payment settlements.China should adopt rule of reason,not adopt per se rule or scope of the patent test rule to review reverse payment settlements.In the application of rule of reason,the plaintiff,first of all,proves that the settlements not only restrict the import of generic drugs into market,but also contain the transfer of value,and the brand name drug manufacturer have market power;secondly,the defendant proves that the reverse payment is reasonable,not to delay the sale of generic drugs.Finally,if the plaintiff can refute the defense of defendant to prove that the reverse payment is unreasonable,to delay the sale of the generic drug or the act of defendant can be replaced by less competitive behavior,it means the completion of the burden proving settlements unreasonably restrict competition.