Susanna Rogers: Thank you Richard for joining us today and for offering to share your views on the General Court’s judgment in Lundbeck…a long awaited decision. As we know the General Court has upheld the Commission’s finding that Lundbeck and certain generic producers had entered into pay-for-delay agreements. What is sort of interesting to me actually is that this case originated back in 2002 when the agreements were first entered into. Is it usual for cases to take this long?
Richard Whish: Well no, the circumstances I think are highly unusual. I believe I am correct in saying that the Danish authority looked at this originally and came to the conclusion that there was not a problem. And then, the Commission decided to pick it up and opened a file on it and began to investigate, but of course you’ll remember, this is at the time when they were deciding whether to have a sector investigation of pharmaceuticals and in due course they did decide to do that and so this and some other cases were all put on the back burner for a period of time while they conducted the market sector enquiry, I forget the exact date of when that reported.
Susanna Rogers: …2008/2009.
Richard Whish: Exactly, exactly, and so in those circumstances, I think it was correct of them to put the case to one side while they were taking their holistic view of the market and then when adopting or when taking their holistic view of the market they realised that there were quite a few of these agreements around. And, I actually think it’s quite logical of an authority to say, well if there are some of these cases let’s do an investigation and take to its logical conclusion, which is what has happened here.
Susanna Rogers: But it’s quite interesting isn’t it, that having started out with the Danish authority, who as you said, you know, didn’t necessarily think there was a problem but actually these should be characterised as sort of a by-object and infringement, you know, these pay-for-delay agreements, were in and of themselves, a problem for competition. What’s your take on that?
Richard Whish: Well, the first thing to say is, that of course there had been two other cases, Servier at the Commission level, and Paroxetine at the level of the Competition and Markets Authority in the UK and in both of those the authorities have conducted object and effect analysis so that’s interesting in itself and the appeals in those cases will have to look at both object and effect. Who knows, perhaps in the case of Lundbeck, perhaps because of the delay and the ten year limitation rule that says a fine can only be imposed within ten years of the initiation of an investigation query, could it be that the Commission at the end did not have time to conduct a facts analysis and so it had to put all its chips on the object analysis?
Susanna Rogers: Ok, well that’s quite an interesting observation and then just in generally in terms of the argument…
Richard Whish: It was merely an observation of what might have happened.
Susanna Rogers: Yes…and then looking at the arguments raised, I mean, one of the key issues here was whether or not you could actually legitimately argue that the generic producers were potential competitors given that actually only market entities would have been at risk because the patents were still in place. What are your thoughts?
Richard Whish: Well, I mean it’s an interesting argument. The agreements to restrict competition by object must be horizontal, meaning it has to be between actual or potential competitors. Now, one could apply the purely logical argument that says I have a patent, a patent can exclude you therefore you’re not a potential competitor. But, that would be highly formalistic. That would be very unrealistic and insofar as people say that object analysis is too formalistic it seems ironic then to argue that a formalistic approach should be taken to the patents as an exclusionary factor. So, I’m afraid I think an analysis of potential competition has to require a review of all the evidence on the facts of the particular case. Patents are awarded that are invalid in this particular case it seems that Lundbeck itself thought it more likely than not that the patent in question might be struck down from a challenge and in circumstances where the generics had already tooled up for the production of this particular generic product. So, I think one can’t say that on the basis of logic alone that the generic is not a potential competitor, I just think it depends on application of the legal test and analysis of all the evidence.
Susanna Rogers: Are there very much risks for companies still for these sort of pay-for-delay style agreements then?
Richard Whish: I think there is clearly a risk. I think there is absolutely obviously a risk and the undertakings involved in these negotiations have to be very clear what it is that they are doing. Are they simply settling litigation as to the validity of the patent? At the end of process, can we both say, alright we’ve dealt with that one, or on the other hand, have I paid you a sum of money, indeed a substantial sum of money? How did we calculate what that amount of money should be? Does the agreement then contain additional restrictions on your right to enter the market? All of that is very different from a simple patent settlement. So, clearly, there are risks.
Susanna Rogers: And there’s a lot of, sort of emphasis, in the decision around the value transfer and the sort of effect that had? Richard Whish: Absolutely, and I have to say with respect to those who don’t like this decision, the amount of money must have some relevance, given that the cut or care formula requires us to look at the content of the agreement and the economic and legal context.
Susanna Rogers: And are there any other observations you would like to share about the judgment from your reading of it?
Richard Whish: I think that it’s a judgment that appears to go into the evidence base on which the Commission relied in great detail. The Commission said all along, that it was basing itself on an accumulation of the number of different factors. I find it difficult to disagree with the analysis of the General Court. One assumes there will be an appeal to the Court of Justice, but we have to remind ourselves that that can only be on a point of law, and that is not an opportunity to re-assess the evidence.
Susanna Rogers: Well, thank you Richard for sharing your thoughts with us.