European Commission Targets Teva on Account of "Pay-for-Delay" Patent Settlement Agreement with Cephalon
- 17/07/2017
- Articles
Please find attached for your information a press release which the European Commission published today to mark the issuing of a Statement of Objections against Teva Pharmaceutical Industries Ltd. (“Teva”). The Commission accuses Teva of having breached Article 101, Treaty on the Functioning of the European Union, by accepting a large payment and other benefits while committing to no longer sell a generic version of modafinil, a sleeping disorder medicine, in the European Economic Area (“EEA”). The Commission takes the view that this arrangement created an artificial, paid-for delay of the market entry of a cheaper generic version of modafinil.
After specific patents in the active substance modafinil, owned by Cephalon, had expired in the EEA, Teva briefly entered the UK market with its less expensive generic product. However, Cephalon relied on specific processing patents associated with modafinil in an attempt to stop Teva. The parties ultimately settled their patent litigation in the UK and the US in a world-wide agreement concluded in 2005 which, as far as the EEA is concerned, provided for the transfers of value for the benefit of Teva discussed above.
The Commission was slow in handling this case as it had opened an investigation against Teva as early as April 2011 challenging facts dating back to 2005. In the meantime, Teva acquired Cephalon in October 2011 and entered into a settlement agreement with the US Federal Trade Commission in May 2015.
The Commission’s procedure against Teva constitutes its fourth “pay-for-delay” case. Each of the previous cases resulted in fines.
In a statement, Teva denies any wrongdoing and adds that “[g]enerally speaking, [it] strongly disagrees with the way the Commission analyses patent settlements in the pharmaceutical sector”.
