FTC v. Actavis Decision Offers Guidance to Drug Manufacturers

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June 18, 2013 – The Supreme Court handed down a 5-3 decision yesterday in FTC v. Actavis, Inc., holding pay-for-delay agreements are subject to antitrust review, but are not presumptively unlawful. The decision was authored by Justice Breyer, who was joined by Justices Kennedy, Ginsburg, Sotomayor and Kagan. Chief Justice Roberts provided a dissent, which was joined by Justices Scalia and Thomas. Justice Alito had previously recused himself from the case.

The Court overturned an Eleventh Circuit dismissal of a Federal Trade Commission complaint against Actavis, Inc., as well as additional drug companies, Solvay Pharmaceuticals, Paddock Laboratories and Par Pharmaceutical, for failing to set forth an antitrust law violation. The Court stated that pay-for-delay agreements may have significant adverse effects on competition and, therefore, found that the FTC complaint did plead an antitrust law violation. The Court went further to advise that the pay-for-delay agreement should be subject to a traditional antitrust analysis under the “rule of reason.” The Court’s decision resolves a circuit split as to whether pay-for-delay agreements should be analyzed under the antitrust sliding “rule of reason” standard or under a “quick look” approach.

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