Originally published on The National Law Review.

On July 16, 2012, the U.S. Court of Appeals for the Third Circuit announced its decision in In Re K-Dur Antitrust Litigation, a case involving so-called "reverse payment" or "pay-for-delay" settlements. A pay-for-delay settlement resolves a patent infringement suit innitiated by a brand-name drug manufacturer against a generic drug manufacturer - a lawsuit that centers on the latter company's attempt to market a competing version of the established brand-name product. In the settlement, the brand pays a (substantial) sum of money to the generic not to market its product upon FDA approval, but instead delay until some time prior to patent expiration. The brand-name drug manufacturer settles because it does not want to risk a verdict rendering its patent invalid or non-infringed by the generic product, and the generic settles because it's gaining a positive result without the need to incur further, substantial litigation expenses. A 2010 analysis by the FTC found that reverse payments settlements cost consumers $3.5 billion annually. FTC, Pay-for-delay: How Drug Company Pay-Offs Cost Consumers Billions (2010)...

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