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BLOG: Supreme Court ‘pay-for-delay’ ruling hardly decides issue

From international law firm Arnold & Porter LLP comes timely views on current regulatory and legislative topics that weigh on the minds of today’s physicians and health care executives.

On June 17, the Supreme Court handed down its decision in FTC v. Actavis, providing some clarity regarding the legal standard courts should apply to so-called “reverse payment” settlements. In these settlements, a brand drug company provides something of value to a generic drug company in order to resolve the parties’ patent litigation and clear the path for the generic product to come to market. In Actavis, the court announced that these settlements should be judged by the rule of reason, a traditional antitrust standard that weighs any anticompetitive effects against any pro-consumer benefits associated with the settlements.

 

Diane E. Bieri

In reaching its decision, the court rejected the different legal standards advocated by the Federal Trade Commission and the drug companies. Specifically, the court found that there was no need to create a special “presumption of illegality” with respect to these settlements, as the FTC had urged. The court also dismissed the idea that the settlements should be immune from antitrust challenge as long as they did not extend the scope of the brand drug’s patent, a test that previously had been applied by several courts of appeal.

 

Jonathan Gleklen

The court provided some guidance on what the rule of reason analysis in a reverse payment settlement case ought to involve. But ultimately, the court’s refusal to draw any bright lines in favor of or against these types of settlements means that lower courts will have to sort through the details of the analysis on a case-by-case basis. Thus, the debate over the legality of reverse payment settlements may have shifted form, but likely will continue for years to come.

Diane E. Bieri, JD, can be reached at Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004-1206; 202-942-6310; email: Diane.Bieri@aporter.com

Jonathan Gleklen, JD, can be reached at Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004-1206; 202-942-5454; email: Jonathan.Gleklen@aporter.com