Wednesday, December 19, 2012
Supreme Court to hear case involving reverse payment settlement in generic drug case
11:20 am cst
The Supreme Court has agreed to hear
the case of Federal
Trade Commission v. Watson Pharmaceuticals, et. al. (11th Cir.). This case involves the issue of “reverse payment”
settlement agreements. In these types of agreements, a generic drug company agrees to drop its challenge to a brand drug company’s
patent and refrain from entering the market for a specified period of time in exchange for a payment by the brand drug company
to the generic drug company.
There is a split in several
circuits with respect to the legality of reverse payment agreements. For example, the Third Circuit has found that “reverse
payments” are prima facie evidence of an unreasonable restraint of trade, which may result in a violation of
the antitrust laws. The Federal Circuit, however, has found that such agreements are valid if they do not extend beyond the
exclusionary scope of the patent.
The Supreme Court decision is expected by the end of June 2013. Until then, parties should continue
to be cautious about entering into such agreements and should consider
the circuit split when doing so.