The United States Supreme Court issued a decision today in FTC v. Actavis, Inc. considering the legality of ‘reverse payment’ patent settlements particularly under the Hatch-Waxman Act. A majority held that such settlements are not presumptively illegal, nor immune from antitrust attack.
In the decision (PDF), considered the situation for AndroGel and particularly the settlements and payments from Solvay Pharmaceuticals to Actavis and Paddock. The Supreme Court held that the lower court erred in dismissing the FTC’s complaint and should have allowed the FTC’s lawsuit to proceed.
Justice Breyer writing for the majority states:
Solvay’s patent, if valid and infringed, might have permitted it to charge drug prices sufficient to recoup the reverse settlement payments it agreed to make to its potential generic competitors. And we are willing to take this fact as evidence that the agreement’s “anticompetitive effects fall within the scope of the exclusionary potential of the patent.” 677 F. 3d, at 1312. But we do not agree that that fact, or characterization, can immunize the agreement from antitrust attack.[p8]
Whether a particular restraint lies “beyond the limits of the patent monopoly” is a conclusion that flows from that analysis and not, as THE CHIEF JUSTICE suggests, its starting point. [p10]
Writing in dissent, Justice Roberts (joined by Justice Scalia and Thomas) concluded:
The majority today departs from the settled approach separating patent and antitrust law, weakens the protections afforded to innovators by patents, frustrates the public policy in favor of settling, and likely undermines the very policy it seeks to promote by forcing generics who step into the litigation ring to do so without the prospect of cash settlements.[p18]
Both the majority and dissent discuss the possible implications of the decision on likelihood of future pharmaceutical litigation and settlements. It is interesting to compare today’s decision with the decision of the Court of Appeals for the Eleventh Circuit in July 2012 in K-Dur which held that reverse payment settlements were prima facie evidence of an unreasonable restraint of trade.
Some commentary on the decision is available from SCOTUSblog, the FTC, PatentlyO, the NY Times and Forbes.