The U.S. Court of Appeals for the First Circuit Concludes that a Reverse Payment Need Not Be in Cash (Loestrin)

e-Competitions Bulletin, No. 78533, March 2016

5 Pages Posted: 21 Mar 2016

Date Written: March 17, 2016


In the area of drug patent settlements, the First Circuit's ruling in In Re Loestrin 24 Antitrust Litigation is a crucial decision. Since the Supreme Court’s ruling in FTC v. Actavis, much ink has been spilled on whether "payment" applies beyond cash.

The vast majority of district courts (as well as the Third Circuit in the Lamictal case) have correctly found that it does. But the district court In re Loestrin did not. The issue is still alive, as the Supreme Court recently requested the plaintiffs' response to the defendants' petition for certiorari in Lamictal.

In the Loestrin decision, the First Circuit held that non-cash conveyances present similar harms as cash transfers. It recognized that a contrary conclusion would lead to the evasion of Actavis and a promotion of form over substance.

In this short article, I conclude that the Loestrin decision puts the nail in the coffin of the argument that Actavis is limited to cash. The Loestrin decision also effectively disposes of the possibility of Supreme Court review. There is no circuit split. The two federal appellate courts that have addressed the issue have clearly and unequivocally held that payment encompasses more than just cash. In dicta, the California Supreme Court in In re Cipro Cases I & II agreed. And all 9 district courts that have addressed the issue have held that payment encompasses non-cash conveyances.

As the courts move on to confront issues left open by Actavis such as the appropriate antitrust framework, role of causation, and pleading requirements, the Loestrin decision should put the easy issue of whether payment is limited to cash firmly in the rearview mirror.

Keywords: antitrust, patent, Hatch Waxman, drugs, pharmaceuticals, reverse payments, pay for delay

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

Suggested Citation

Carrier, Michael A., The U.S. Court of Appeals for the First Circuit Concludes that a Reverse Payment Need Not Be in Cash (Loestrin) (March 17, 2016). e-Competitions Bulletin, No. 78533, March 2016, Available at SSRN:

Michael A. Carrier (Contact Author)

Rutgers Law School ( email )

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