When the Supreme Court decided FTC v. Actavis two years ago, holding that reverse-payment settlements of pharmaceutical patent litigation should be subjected to the antitrust “rule of reason” inquiry, it settled the long-litigated question of what standard courts should apply in such cases. But the majority’s opinion—which jettisoned presumptive analyses used by the Third Circuit and some other circuit courts of appeals in favor of a more fact-intensive analysis—did not directly address the predictable question of whether the standard would apply to both cash and non-cash settlements.
Since Actavis, several district courts have been asked to evaluate whether Actavis antitrust scrutiny should be applied to settlements involving an agreement by a producer of a patented, brand-name drug not to produce an “authorized generic” version of the drug following expiration of the patent in exchange for dismissal of a would-be generic manufacturer’s patent invalidity or noninfringement claims (“no-AG settlement”). In the first federal appellate decision to substantively examine Actavis, a unanimous panel of the Court of Appeals for the Third Circuit resolved an intra-circuit split by holding that a noncash, no-AG settlement agreement may also trigger antitrust scrutiny.
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