An Event Study of Perindopril (Servier) Reverse Payment Patent Settlements' Case: Is Krka Truly an Exception Within the Pay-For-Delay Commission Decision?
Abstract
The article aims to fill the gap in the literature on reverse payment patent settlements between patent-holders and generic pharmaceutical firms in EU competition law. Based on the event study of the Perindopril (Servier) case of the European Commission, the research provides a novel assessment of the welfare effects of Commission enforcement and the following judiciary decision on the legality of Commission sanctions. Within the case, the analysis paid particular attention to the generic corporation Krka because Commission fined Krka for the settlement with Servier that did not include the reverse payment, and the Commission decision did not survive the scrutiny of the General Court. The relative economic power of Krka in the perindopril market is also a factor that, together with the enforcement effect assessment, provides a different perspective of the event study's normative implications to the existing research.
Povzetek
Namen članka je zapolniti vrzel v literaturi o poravnavah v zvezi s povratnimi plačili med imetniki patentov in generičnimi farmacevtskimi podjetji na področju konkurenčnega prava EU. Raziskava temelji na študiji dogodka v zadevi Evropske komisije Perindopril (Servier) in zagotavlja novo oceno učinkov izvrševanja s strani Komisije na blaginjo in naknadne sodne odločitve o zakonitosti sankcij Komisije. V okviru primera je analiza posebno pozornost namenila generični korporaciji Krka, saj je Komisija naložila globo družbi Krka zaradi poravnave s podjetjem Servier, ki ni vključevala povratnega plačila, odločitev Komisije pa ni prestala presoje Splošnega sodišča. Relativna gospodarska moč družbe Krka na trgu perindoprila je prav tako dejavnik, ki skupaj z oceno učinka izvrševanja zagotavlja drugačen pogled na normativne posledice študije dogodka v primerjavi z obstoječimi raziskavami.
Downloads
References
Bhagat, S., Romano, R. (2002b) Event studies and the law: Part II: Empirical studies of corporate law. American Law and Economics Review, 4(2), p. 380.
Clancy, M., Geradin, D., Lazerow, A. (2014) Reverse-Payment Patent Settlements in the Pharmaceutical Industry: An Analysis of U.S. Antitrust Law and EU Competition Law Symposium: EU and U.S. Competition Enforcement: Convergence or Divergence. Antitrust Bulletin, 59(1), p. 153-172.
Colangelo, M. (2017) Reverse payment patent settlements in the pharmaceutical sector under EU and US competition laws: A comparative analysis. World Competition: Law and Economics Review, 40, p. 471-504.
Davies, S., Ormosi, P. L. (2012) A comparative assessment of methodologies used to evaluate competition policy. Journal of Competition Law and Economics, 8(4), p. 769-803, doi:10.1093/joclec/nhs025.
Delgado, J., Otero, H., Pérez-Asenjo, E. (2016) Assessment of antitrust agencies' impact and performance: An analytical framework. Journal of Antitrust Enforcement, 4(2), p. 323-344, doi:10.1093/jaenfo/jnw003.
Drake, K. M., McGuire, T. G. (2016) Stock price evidence for anticompetitive effects in the Nexium "reverse-payment" settlement. Journal of Competition Law and Economics, 12(4), p, 735-747, doi:10.1093/joclec/nhw015.
Drake, K. M., Starr, M. A., McGuire, T. G. (2015) Do "reverse payment" settlements constitute an anticompetitive pay-for-delay? International Journal of the Economics of Business, 22(2), 1p. 73-200, doi:10.1080/13571516.2015.1045744.
Esposito, F., Montanaro, F. (2014) A fistful of euros: EU competition policy and reverse payments in the pharmaceutical industry. European Competition Journal, 10(3), p. 499-521, doi: http://www.tandfonline.com/loi/recj20#.VsI2sSkS2Lp.
Fama, E. F. (1970) Efficient capital markets: A review of theory and empirical work. The Journal of Finance, 25(2), p. 383-417, doi:10.2307/2325486.
Fama, E. F., Fisher, L., Jensen, M. C., Roll, R. (1969) The adjustment of stock prices to new information. International Economic Review, 10(1), p. 1-21, doi:10.2307/2525569.
Frank, R. G., Hartman, R. S. (2015) The nature of pharmaceutical competition: Implications for antitrust analysis. International Journal of the Economics of Business, 22(2), doi:10.1080/13571516.2015.1045745301-343.
Geradin, D., Ginsburg, D. H., Safty, G. (2015) Reverse payment patent settlements in the European Union and the United States. George Mason Legal Studies Research Paper No. LS, 1-24.
Gowen, A. (2016) Saving federal settlement privilege after Actavis. The University of Chicago Law Review, 83(3), p. 1505-1541.
Hartman, R. S., Drake, K. M., McGuire, T. G. (2019) Event study analysis in cases with multiple brand-generic reverse-payment settlements. International Journal of the Economics of Business, 26(3), p. 399-410, doi:10.1080/13571516.2019.1651151.
Hüschelrath, K., Leheyda, N. (2010) A methodology for the evaluation of competition policy. European Competition Journal, 6(2), p. 397-425, doi:10.5235/174410510792283781
Jacobo-Rubio, R., Turner, J. L., Williams, J. W. (2016) Generic entry, pay-for-delay settlements, and the distribution of surplus in the US pharmaceutical industry.
Jacobo-Rubio, R., Turner, J. L., Williams, J. W. (2020) The distribution of surplus in the US pharmaceutical industry: Evidence from Paragraph IV patent-litigation decisions. The Journal of Law and Economics, 63(2), p. 203-238, doi:10.1086/707407.
Kaspereit, T. (2015) EVENTSTUDY2: Stata module to perform event studies with complex test statistics (Version S458086): Boston College Department of Economics, available at: https://ideas.repec.org/c/boc/bocode/s458086.html.
Klick, J., Sitkoff, R. H. (2008) Agency costs, charitable trusts, and corporate control: Evidence from Hershey's kiss-off. Columbia Law Review, 108(4), p. 749-838, doi:10.2307/40041779.
Krickl, L., Avery, M. (2014) Roberts was wrong: Increased antitrust scrutiny after FTC v. Actavis has accelerated generic competition. Virginia Journal of Law & Technology, 19(3), p. 509-601.
Kyle, M. K. (2016) Competition law, intellectual property, and the pharmaceutical sector. Antitrust Law Journal, 81(1), p. 1-33.
MacKinlay, A. C. (1997) Event studies in economics and finance. Journal of Economic Literature, 35(1), p. 13-39.
McGuire, T. G., Drake, K. M., Elhauge, E. R., Hartman, R. S., Starr, M. A. (2016) Resolving reverse-payment settlements with the smoking gun of stock price movements. Iowa Law Review, 101(4), p. 1581-1599.
Meunier, V., Padilla, J. (2016). Should reverse payment patent settlements be prohibited per se? Concurrences (3), p. 15.
Panattoni, L. E. (2011) The effect of Paragraph IV decisions and generic entry before patent expiration on brand pharmaceutical firms. Journal of Health Economics, 30(1), p. 126-145, doi: https://doi.org/10.1016/j.jhealeco.2010.09.004.
Patell, J. M. (1976) Corporate forecasts of earnings per share and stock price behavior: Empirical test. Journal of Accounting Research, 14(2), p. 246-276, doi:10.2307/2490543.
Schmidt, H. (2019) Competition law and IP rights: Not so complementary: Time for re-alignment of the goals? World Competition: Law and Economics Review, 42(4), p. 451-474.
Straus, J. (2016) "Pay for delay" – a subtly hidden, overlooked or ignored Transatlantic divide: Exemplified on the Actavis decision of the US Supreme Court and the Servier decision of the EU Commission. Zbornik Znanstvenih Razprav, 76, p. 197-234.
Zakka, S. (2017) Pay-for-delay decisions: Are they truly restricting competition. European Competition and Regulatory Law Review, 1(4), p. 276-287.
