C. Kyle Musgrove and Richard A. Ripley in CPI Antitrust Chronicle: Reverse Payment Settlements: Presumptively Bad or Usually Acceptable



In April 2012, the Federal Trade Commission (“FTC”) suffered yet another rebuke of what FTC Chair Jon Leibowitz has characterized as “one of the Commission’s top competition priorities,” i.e., stopping “reverse payment” settlements in drug patent litigation. The Eleventh Circuit’s decision in the AndroGel case presents an opportunity to review the concept of “reverse payment” settlements, the agency’s persistent condemnation of these agreements, the courts’ near-unanimous endorsement of the concept, and assess which side holds the better hand.


The Hatch-Waxman Act provides a simplified pathway to approval for generic pharmaceuticals by permitting a generic manufacturer to file an Abbreviated New Drug Application (“ANDA”) with the Food and Drug Administration (“FDA”) prior to the expiration of a brand-name manufacturer’s patent. The generic manufacturer can rely on the safety and efficacy studies conducted by the brand-name manufacturer to gain FDA approval of a generic by proving its bioequivalence with the brand-name pharmaceutical.

Under the Act, an ANDA applicant must make one of four certifications with respect to any patents associated with the brand-name pharmaceutical and listed in the Approved Drug Products with Therapeutic Equivalence Evaluations (“Orange Book”). The reverse payment settlements flow from litigation precipitated by a “Paragraph IV” (“PIV”) certification, under which the ANDA applicant attests that the patent covering the brand-name drug is invalid, unenforceable, or will not be infringed by the manufacture, use, or sale of the new drug for which the application is submitted.3 After that certification, the ANDA applicant has 20 days to notify
the patent holder.

Excerpted from CPI Antitrust Chronicle, June 2012. 

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