Pay-For-Delay Does not Pay: EU Imposes Penalties on Ranbaxy and Eight Other Pharma Companies

A few hours ago, it was reported that the EU’s competition law regulator has decided to impose penalties on Ranbaxy and eight other pharma companies for indulging in “pay-for-delay” deals, which resulted in delayed introduction of generic drugs in the market, and denied access to affordable drugs to patients. This is the culmination of an inquiry that was launched in 2009 by the anti-trust regulator of EU.

Pay-for-delay deals usually form part of the settlement of patent infringement litigation between pharma companies. In contrast to ever-greening by patenting (which is covered and forbidden under Section 3(d) of the Indian Patents Act), pay-for-delay involves a concerted action on the part of the patentee and a generic company to deliberately delay the release of the generic version of a patented drug, which gives an extended market breather to the patentee. Instances such as these typically fall within the realm of Competition law, which could involve cartelization as well as abuse of dominance.   

According to a study undertaken by the US Federal Trade Commission, pay-for-delay deals burn a hole worth US3.5 billion in the taxpayers’ pockets. Earlier this year, the US government released a document titled “Reducing the Deficit in a Smart and Balanced Way”, wherein it was observed that banning pay-for-delay deals could save the US government USD 11 billion in federal health programs.

So far, to the best of my knowledge, there have been no reported instances of pay-for-delay deals between pharma players in India. If at all there is a settlement reached between warring parties in on-going pharma patent infringement suits, it would be interesting to see the reaction of the Competition Commission of India.