Laura Shores Discusses Third Circuit Opinion of What Constitutes Reverse Payments in Global Competition Review

Global Competition Review reports that the Federal Trade Commission and the American Antitrust Institute have each filed separate amicus briefs with the US Court of Appeals for the Third Circuit, stating that the court was wrong to limit the Supreme Court’s decision in last year’s Actavis case, which ruled that branded pharmaceutical companies that pay generic companies to delay entering the market may be violating antitrust laws in the process. The Third Circuit ruled that only cash payments should be considered as violations, but the amicus briefs argue that many settlements in patent disputes between generic and branded pharmaceutical companies contain terms that are even more harmful to competition than cash.

According to Kaye Scholer Antitrust Partner Laura Shores, “The Third Circuit’s own K-Dur opinion, which was vacated by Actavis, actually distinguished between settlements that involved cash and those that did not.”

The K-Dur opinion stated that if “money changed hands” in the settlement, the defendants needed to justify why. “They didn’t stop to think what else might be problematic. It’s interesting to think about how they would reconcile a reversal here with what they said earlier in K-Dur,” Shores noted. “It’s conceivable that they would find Judge Walls’s definition to be consistent with their own, but most would probably find it surprising given how antagonistic they seem to be to these kinds of settlements.”