Litigation Alert: U.S. Supreme Court to Weigh In on Reverse Payment Deals

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On March 25, 2013, the U.S. Supreme Court heard oral argument in FTC v. Actavis, Inc.,1 which is on appeal from the U.S. Court of Appeals for the Eleventh Circuit. This case addresses a type of patent litigation settlement most common in the pharmaceutical industry sometimes referred to as a “reverse payment” or “pay for delay” agreement. As the Eleventh Circuit explained, in a reverse payment settlement, the patent holder pays the allegedly infringing generic drug company to delay entering the market until a specified date, which protects the patent monopoly against a judgment that the patent is invalid or would not be infringed by the generic company’s product. FTC v. Watson Pharms., Inc., 677 F.3d 1298, 1301 (11th Cir. 2012).

To put this case in context, it is helpful to have an understanding of the process by which brand name pharmaceutical manufacturers and generic companies introduce drugs to market. One way a brand name manufacturer initiates approval for a new drug is to submit a New Drug Application (“NDA”) to the Food and Drug Administration (“FDA”) with detailed information about the drug, including data that demonstrates the safety and efficacy of the drug. 21 U.S.C. § 355(b)(1). The NDA applicant must also provide the FDA with the patent numbers of any patent that a generic manufacturer would infringe by making or selling the NDA applicant’s drug. 21 U.S.C. § 355(b)(1); 21 C.F.R. § 314.53(b). If the FDA approves the NDA, the drug and patent information is published in a book commonly known as the “Orange Book.”

Please see full alert below for more information.

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