Should Pay for Delay Be a Cause for Concern in Japan?

Yes, it should. Pay for delay settlements have raised concern across the globe and have led to significant competition law scrutiny in the US and Europe. Branded pharmaceutical companies use patent settlements to pay potential generic entrants in order to stay off the market, thereby reducing competition and harming consumers. This conduct has been found to be unlawful by the US Supreme Court and the EU General Court. In Japan, however, such anticompetitive settlements allegedly do not take place, despite offering similar economic incentives to pharmaceutical companies in the second largest pharmaceutical market in the world. This is intriguing and warrants close scrutiny. This article is the first to investigate, based on a comparative analysis with the US and EU whether or not the Japanese pharmaceutical sector is susceptible to pay for delay settlements. We come to the conclusion that the regulatory regime in Japan features the necessary prerequisites to make pay for delay settlements a feasible yet anticompetitive drug lifecycle management strategy.