Supreme Court Opts for Rule of Reason Analysis in Andro-Gel Reverse Payment Decision

On Monday, June 17, the Supreme Court handed down a decision in FTC v. Actavis, Inc., bringing some clarity to the antitrust treatment of so-called reverse payment patent settlements between brand-name drug manufacturers and would-be generic competitors, but leaving many open questions as well. In an opinion written by Justice Breyer, the Court reversed the Eleventh Circuit's decision by a vote of 5-3 and rejected both the respondents' proposed "scope of the patent" test that had immunized most settlements from antitrust challenge and the "presumptively unlawful" standard endorsed by the FTC. The Court instead opted for a rule of reason analysis, leaving it to the lower courts to sort out the specifics. The decision is unlikely to reduce the number of investigations or lawsuits related to such settlements, and ensures that both will be complex and protracted.