Third Circuit rules in favor of FTC view on pharmaceutical patent settlements: next stop, Supreme Court?
19 June 2012Antitrust, Competition, and Economic Regulation Alert
On 16 July 2012, the U.S. Court of Appeals for the Third Circuit issued a decision holding that pharmaceutical patent settlements that restrict generic entry and contain a payment to the generic company are presumptively unlawful under the antitrust laws. In a single stroke, the decision dramatically alters the legal landscape with respect to the antitrust treatment of pharmaceutical patent settlements with so-called "reverse payments." By holding that a patent settlement can violate the antitrust laws without proof that it affected competition outside the scope of a valid patent, the court rejected the legal standard that had been applied by the Second, Eleventh, and Federal Circuits, and instead adopted the legal position that the Federal Trade Commission has long advocated (until now, largely unsuccessfully). The decision resuscitates the FTC's enforcement efforts in an area that Chairman Leibowitz has described as his highest priority, and creates a clear split among the circuit courts that begs for Supreme Court review.