In an amicus brief filed with 70 law, economics, and business professors, the American Antitrust Institute (AAI) asks the First Circuit Court of Appeals to reverse a district court’s holding that reverse-payment settlements can only be illegal when the payment is in the form of cash.
The brief presaged today’s ruling of the Third Circuit Court of Appeals holding that a “no authorized generic” promise may be actionable, and reversing the only other lower court decision to immunize non-cash payments. The AAI had also previously filed a brief in the Third Circuit case, King Drug Co. of Florence, Inc. v. Smithkline Beecham Corp. (In re Lamictal), supporting the position adopted by the Third Circuit.
In the First Circuit case, plaintiffs alleged that Warner Chilcott had unlawfully extended its monopoly on the branded drug Loestrin 24 by settling patent litigation with an agreement by generic challengers to delay their entry into the market in exchange for Warner Chilcott’s agreement not to launch an authorized generic version of Loestrin 24 and other non-cash consideration.
The amicus brief argues that the district court’s ruling, if not reversed, will gut the Supreme Court’s Actavis decision, which held that reverse-payment agreements may be anticompetitive and violate the Sherman Act where the payment allows a branded drug maker to protect its monopoly by sharing monopoly rents with would-be generic challengers.
The AAI and the professors argue that by limiting Actavis to cash payments, the district court elevated form over substance and misunderstood the import of the Supreme Court’s ruling, which did not turn on the form of the payment.
The brief was written by Professor Michael Carrier, a member of AAI’s Advisory Board.