CPI Antitrust Chronicle (Sept. 2016)
8 Pages Posted: 24 Sep 2016
Date Written: August 17, 2016
Since the Supreme Court’s decision in FTC v. Actavis, the question that has received the most attention is whether “payment” is limited to cash or encompasses non-cash forms of consideration. The courts, including the Third Circuit in the “King Drug” case, have consistently held that payment includes non-cash transfers. Despite this uniformity, the settling parties sought Supreme Court review of the King Drug decision, and indicating its serious consideration, the Court has requested the views of the Solicitor General.
This article, which builds on a letter submitted to the Solicitor General on behalf of 61 professors, offers four reasons why the Court should not grant certiorari: (1) drug patent settlements are not immune from antitrust scrutiny, (2) the arrangement at issue can induce delayed generic entry, (3) this is not an exclusive license, and (4) there is no circuit split or difficult issue presented.
Among the complex issues courts have considered after Actavis, the question of whether payment is restricted to cash (and, relatedly, whether an “exclusive license” is immune from antitrust scrutiny) is easy. Rather than opening a completely avoidable can of worms that could lead to mischief by which drug companies disguise anticompetitive settlements in unwitting court-blessed packages, the Court should deny certiorari in King Drug.
Keywords: settlements, patent, antitrust, Actavis, pharmaceuticals, drugs, reverse payments, exclusive license
JEL Classification: I18, K21, L40, L41, L43, L65, O34, O38
Suggested Citation: Suggested Citation
Carrier, Michael A., Why the Supreme Court Should Deny Certiorari in King Drug (August 17, 2016). CPI Antitrust Chronicle (Sept. 2016). Available at SSRN: https://ssrn.com/abstract=2842254