In June 2013, the Supreme Court ruled in FTC v. Actavis that reverse-payment pharmaceutical patent settlement agreements are subject to rule of reason analysis under the antitrust laws. In doing so, the Court not only rejected both the FTC’s position that such agreements should be presumptively unlawful and the position of pharmaceutical manufacturers that such agreements should only be subject to scrutiny where they exceed the scope of the relevant patent, but also left it to the lower courts to develop the details of the framework to be applied. While the outcome was not necessarily a surprise, by declining to adopt either of these arguably simpler approaches, the ruling likely raised as many questions as it answered.
Currently a number of courts are actively trying to carve the first contours of the rule of reason analysis called for under Actavis by attempting to answer the threshold question—namely, what constitutes a “payment” under Actavis. More specifically, these courts are considering whether scrutiny under Actavis is limited to cash payments from a brand to a generic or, if instead, the rule is broad enough to also reach other non-cash forms of consideration.
In a recent article, Lauren Battaglia discusses the evolution of non-cash forms of consideration as elements of pharmaceutical patent settlements, currently pending litigation on this issue, and the implications of extending Actavis scrutiny in this way for future settlements and litigation.