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SubscribeThe CJEU consolidates its doctrine on "pay-for-delay" agreements in the pharmaceutical sector
On October 23, 2025, the Court of Justice of the European Union (CJEU or "the Court") upheld the €60.5 million fine that the European Commission imposed on Teva and Cephalon —Case C-2/24 P, regarding Decision AT.39686— in 2020. The Commission sanctioned the agreement between the two companies that delayed the market entry of a generic version of the sleep disorder drug Provigil. This judgment, which upholds the first-instance judgment of the General Court (which we commented on here), consolidates the case law on "pay-for-delay" agreements and highlights the competition risks that arise when, in the context of patent expiry, the patent-holder offers economic or commercial considerations that, in practice, incentivize the generic manufacturer to postpone its market entry.
The CJEU dismisses all grounds of appeal and confirms the infringement
Teva and Cephalon raised two grounds in their appeal, alleging that the General Court had erred in law: (i) by applying the legal test from the Generics (UK) judgment to determine the existence of a restriction of competition by object; and (ii) by assessing whether there was a restriction by effect. The CJEU dismissed both grounds and, consequently, the appeal in its entirety.
The judgment reinforces and clarifies the analytical framework of the Generics (UK) judgment for assessing reverse payment patent settlement agreements (i.e., in patent litigation, payments by the patent-holder to the —alleged— infringing company to close the case) under Article 101 of the Treaty on the Functioning of the Euroepan Union (TFEU). In this case, the Court confirmed that, in such circumstances, the settlement agreement constituted a restriction by object, dismissing arguments that the GC had conducted an improper counterfactual analysis or applied a stricter legal standard.
The CJEU confirmed that assessing whether value transfers act as incentives to delay entry requires a comprehensive examination of the agreement, its context, and, in particular, the role of non-monetary "side-deals" in the form of commercial economic advantages (supply contracts, distribution agreements, and other favorable transactions). The Court thus endorsed the General Court's conclusion that the transfers to Teva had no other plausible explanation than not to compete and not to challenge the patents.
In conclusion, the Court reaffirms that when value transfers to a generic manufacturer take the form of favorable side-deals, they must be assessed globally to determine if the value transfer can only be explained as an incentive for the generic manufacturer to stay out of the market. This doctrine is complemented by the one established by the CJEU last year in Case C-176/19, Servier, which we analyzed in our Post | Sentencia del Tribunal de Justicia en el caso Servier.
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