The U.S. Court of Appeals for the Third Circuit Applies an Appropriate Post-Actavis Pleading Standard (Lipitor)

Abstract

In FTC v. Actavis, the Supreme Court held that settlements by which brand drug firms pay generics to delay entering the market could violate antitrust law. In the period since the decision, the lower courts have made clear that “payment” extends beyond cash to encompass non-cash forms of consideration.

This important conclusion on payment could be undermined if courts require plaintiffs alleging settlements with non-cash conveyances to surmount excessive pleading hurdles. That is exactly what the district court did in the Lipitor and Effexor cases. This short piece describes the Third Circuit’s Lipitor decision, which overturned the Lipitor and Effexor rulings. It shows how the Third Circuit harmonized pleading case law with Supreme Court and other precedent. And it concludes that the Third Circuit applied an appropriate standard that ensures a continued role for antitrust law in policing anti-competitive settlements.

Keywords: Drugs, Patents, Settlements, Pleading, Actavis, Lipitor, Effexor

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