Supreme Court Issues Actavis Decision On Reverse-Payment Settlements


The Supreme Court has issued its much-awaited decision in FTC v. Actavis on the antitrust analysis of reverse-payment settlements of Hatch-Waxman Act litigation.

Resolving a dramatic split between the Third Circuit and the Eleventh, Second and Federal Circuits, the Court reversed the Eleventh Circuit’s application of the so-called scope-of-the-patent test but also declined to follow the Third Circuit’s rule of presumptive illegality.

The Court directed, instead, that lower courts apply to these cases a traditional rule-of-reason analysis, in which the magnitude of the reverse payment in relationship to the cost of litigation, any services provided by a generic manufacturer, or other legitimate justification, rather than a full-fledged evaluation of the underlying patent’s strength, likely will play a significant role in the courts’ reasonableness assessment.

The decision (available here) is sure to have significant repercussions not only for pharmaceutical companies, but also for the biologics industry and beyond.

Please watch for our more detailed analysis of the decision in the next few days.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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