A US Court Issues Formalistic Ruling on Reverse-Payment Settlements After 'Actavis' (GlaxoSmithKline/Teva Pharmaceuticals/Louisiana Wholesale Drug Company/King Drug Company)
e-Competitions Bulletin, No. 63588, February 2014
5 Pages Posted: 17 Feb 2014
Date Written: February 13, 2014
In FTC v. Actavis, the Supreme Court held that a brand firm's payment to a generic to delay entering the market could violate the antitrust laws. In one of the first post-Actavis decisions, the New Jersey district court in In re Lamictal Direct Purchaser Antitrust Litigation issued a narrow, formalistic ruling on the question of what constitutes a payment.
In the settlement at issue, GlaxoSmithKline agreed (in what is known as a no-authorized-generic provision) not to launch its own generic version of epilepsy- and bipolar-disorder-treating Lamictal during Teva’s 180-day exclusivity period, which the Hatch-Waxman Act reserves for the first generic to challenge a brand firm’s patent.
This short article highlights two flaws in the opinion. First, the ruling was formalistic in concluding that Actavis was limited to cash payments. And second, the court invoked Actavis’s “five considerations” (which explained why antitrust immunity was not appropriate) as defenses the settling parties could offer.
The article concludes that future courts would benefit from more directly focusing on the substance of brand conveyances to generics and more carefully following the Supreme Court’s guidance.
Keywords: Pharmaceuticals, settlements, reverse payments, patent, antitrust, Actavis, Hatch Waxman, brands, generics, authorized generics
JEL Classification: K21, L40, L41, L43, L65, O34, O38
Suggested Citation: Suggested Citation