AAI Urges Third Circuit to Reverse Reverse-Payment Decision (In re Wellbutrin XL Antitrust Litigation)

The American Antitrust Institute (AAI) filed an amicus brief in the Third Circuit Court of Appeals in support of plaintiffs’ petition for rehearing and rehearing en banc. The petition seeks review of a decision by a panel of the court upholding summary judgment for defendants and dismissing plaintiffs’ pay-for-delay and sham litigation claims.

One key issue in the case, In re Wellbutrin XR Antitrust Litigation, was whether plaintiffs could show antitrust injury as a result of a reverse payment made by brand manufacturer GlaxoSmithKline (GSK) to generic firm Anchen, given the existence of a “blocking” patent held by another firm (Andryx) that was litigating against Anchen.  The Third Circuit held that plaintiffs failed to show a disputed issue of fact as to whether Anchen would have prevailed in the patent litigation against Andryx.  In so doing, the court held that “risk aversion makes it difficult to use the size of a settlement as a proxy for the brand-name’s likelihood of success in litigation.”

AAI’s amicus brief argues that the court’s “risk aversion” argument is inconsistent with the Supreme Court’s landmark Actavis decision as well as mainstream economics, which treats large publicly held firms like pharmaceutical companies as risk neutral, not risk averse.  AAI cautioned that the panel’s acceptance of an assumption that pharmaceutical companies are risk averse threatens to impede [DM1] reverse-payment cases generally, including those brought by the government.

AAI Advisory Board Member Steve Shadowen wrote AAI’s brief with AAI General Counsel Rick Brunell.