This presentation by Paul Lugard (BIAC) was made during a workshop on “Recent Challenges in Competition and IP in Pharmaceutical Markets” held by the OECD in Paris on 26 February 2019. More papers and presentations on the topic can be found out at oe.cd/2tD

1. CONFIDENTIAL
© Copyright Baker Botts 2019. All Rights Reserved.
Comments on behalf of BIAC
Paul Lugard – 26 February 2019
OECD Workshop on Recent Challenges in
Competition and IP in Pharmaceutical Markets

2. BAKER BOTTS
Distinguishing between “by object” and “effects” restrictions under 101
TFEU is of key importance, especially in pharmaceutical markets
• Case C-67/13 P, Groupement des cartes bancaires v European Commission,
paragraph 58:
“ …The concept of restriction of competition ‘by object’ can be applied only to certain
types of coordination between undertakings which reveal a sufficient degree of harm
to competition that it may be found that there is no need to examine their effects,
otherwise the Commission would be exempted from the obligation to prove the actual
effects on the market of agreements which are in no way established to be, by their
very nature, harmful to the proper functioning of normal competition. …”
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3. BAKER BOTTS
Similarly, the test under 102 TFEU requires an investigation into claimed
efficiencies
• Case C-413/14 P, Intel v. European Commission, paragraphs 140-141:
"The analysis of the capacity to foreclose is also relevant in assessing whether a system
of rebates which, in principle, falls within the scope of the prohibition laid down in
Article 102 TFEU, may be objectively justified. In addition, the exclusionary effect arising
from such a system, which is disadvantageous for competition, may be
counterbalanced, or outweighed, by advantages in terms of efficiency which also
benefit the consumer . .. That balancing of the favourable and unfavourable effects of
the practice in question on competition can be carried out in the Commission’s decision
only after an analysis of the intrinsic capacity of that practice to foreclose competitors
which are at least as efficient as the dominant undertaking.”
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4. BAKER BOTTS
Vexatious litigation and misuse of regulatory procedures
• Example: Company A files 17 divisional patents in Germany. Company B
claims that Company A seeks to extend patent protection and abuses its
dominant position. True? Is the aim of eliminating competition relevant?
And, if so, how does one establish that?
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5. BAKER BOTTS
General comments
• IP is indispensable to the creation of generic medicines, which would not
exist without originator IP-protected medicines. By paving the way for
generics, a continuous cycle of innovation incentivized by patents helps
lower health care costs and makes certain medicines more accessible to
patients over time.
• Competition is an effective way to promote affordable access to quality, safe
and effective medicines. In exchange for the limited period of protection
patents provide, innovators must fully disclose their inventions—which
accelerates innovation and enables potential competitors to build on those
inventions.
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6. BAKER BOTTS
General comments
• Patent Settlements: there are many legitimate reasons why companies may
choose to settle a patent litigation. Laws or actions to restrict certain kinds
of pharmaceutical patent settlements could prevent some pro-consumer
settlements that bring generics to market prior to patent expiration.
• Evergreening / Product Hopping: incremental innovation advances
medicines by expanding therapeutic classes, increasing the number of
available dosing options, and improving other properties of existing
medicines. Incremental innovation can include, for example, reformulating a
medicine to encourage children’s compliance with treatment regimens or
increasing a medicine’s shelf-life and heat-stability to ensure that the
medicine is effective in diverse environments. Improvements to the
medicine will not extend the patent life of the existing medicine and in fact,
any firm can produce and market the original medicine once patent
exclusivity expires (assuming they meet the requisite regulatory
requirements).
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