An Event Study of Perindopril (Servier) Reverse Payment Patent Settlements' Case: Is Krka Truly an Exception Within the Pay-For-Delay Commission Decision?
Keywords:
event study, welfare effects, reverse payment patent settlement, pay-for-delay, patent litigation, EU competition law, antitrust enforcement evaluation
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.
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References
Bhagat, S., Romano, R. (2002a) Event studies and the law: Part I: Technique and corporate litigation. American Law and Economics Review, 4(1), p.141.
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.
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.
Published
2023-06-29
How to Cite
Ocepek F. (2023). An Event Study of Perindopril (Servier) Reverse Payment Patent Settlements’ Case: Is Krka Truly an Exception Within the Pay-For-Delay Commission Decision?. LeXonomica, 15(1), 121-146. https://doi.org/10.18690/lexonomica.15.1.121-146.2023
Section
Articles