How Not to Apply Actavis
18 Pages Posted: 16 Nov 2014 Last revised: 10 Dec 2014
Date Written: November 14, 2014
One of the most pressing issues in patent and antitrust law involves agreements by which brand-name drug companies pay generic firms to delay entering the market. In FTC v. Actavis, Inc., the Supreme Court held that these settlements could violate the antitrust laws. And while the Court introduced a blueprint for analyzing the agreements, it anticipated that the lower courts would play a crucial role in elaborating the framework.
Along these lines, two recent district court decisions portend ominous difficulties for this area. In fact, if the rulings in In re Lamictal Direct Purchaser Antitrust Litigation and In re Loestrin 24 FE Antitrust Litigation are affirmed and adopted by other courts, plaintiffs will face nearly insurmountable hurdles, rendering the landmark Actavis decision nothing more than a dead letter. This Essay shows that the Lamictal and Loestrin courts erred in (1) applying a framework never anticipated in Actavis, (2) ignoring crucial holdings from Actavis, and (3) amassing unjustified powers for themselves.
In blocking affordable generic prescription drugs, “exclusion payment” settlements cost consumers billions of dollars and have profound consequences for public health. But if the trend unleashed by the Lamictal and Loestrin cases is not quickly reversed, courts will be relegated to the role of traffic cops waving anticompetitive settlements through flashing green lights of judicial “scrutiny.”
Keywords: patent, antitrust, drugs, pharmaceuticals, settlement, Actavis, Lamictal, Loestrin, reverse payments, exclusion payments
JEL Classification: I18, K21, L40, L41, L43, L65, O34, O38
Suggested Citation: Suggested Citation