Proposed sourcing on Supreme Court reverse payment drug patent case; lawyers' views

Within the next several weeks, the US Supreme Court is expected to hand down a ruling in an important case, Federal Trade Commission v Actavis Inc et al, which will address whether and when so-called “reverse payment" settlements (also called pay-for-delay deals) of pharmaceutical patent infringement law suits violate federal antitrust laws.

The Hatch-Waxman regulatory scheme for US Food and Drug Administration approval of generic drugs provides generic manufacturers with an expedited means of challenging brand-name drug manufacturers’ patents via a form of technical infringement, comment attorneys at US law firm Arent Fox in reviewing the implications of the court case. Settlements of Hatch-Waxman patent infringement law suits often involve an arrangement whereby the parties agree to a compromise entry date for the generic, and the brand-name company pays money to the generic company.

The FTC is challenging such settlements as illegal market allocation agreements under the antitrust laws, asserting in the Actavis case that such agreements tend to support monopoly pricing of brand-name drugs by delaying the onset of generic competition, and that they cost consumers billions of dollars each year.