U.S. Court Issues Concerning Ruling on Drug Patent Settlements (Loestrin)

Abstract

In In re Loestrin 24 FE Antitrust Litigation, the U.S. District Court for the District of Rhode Island issued a concerning ruling on drug patent settlements. The court misapplied the Supreme Court’s landmark decision in FTC v. Actavis, granting a motion to dismiss plaintiffs’ challenge to a settlement that had allegedly delayed generic entry.

In this short article, I summarize the case and then discuss six concerns with the opinion: (1) an improper framework, (2) an excessively high bar confronting plaintiffs, (3) a restriction of Actavis to cash payments, (4) the neglect of Actavis holdings, (5) the casting of blame on the Supreme Court, and (6) a disregard of pleading standards. If this decision stands and is adopted by other courts, patent litigants will gladly accept the roadmap the court provided to “evade Sherman Act scrutiny.”

Keywords: patent, antitrust, pharmaceuticals, settlement, reverse payments, exclusion payments, Loestrin

JEL Classification: I18, K21, L40, L41, L43, L65, O34, O38