This post was also written by Jessica R. Rose.

The U.S. Supreme Court last week issued a significant decision subjecting pay-for-delay settlements, a common practice in the pharmaceutical industry, to antitrust review. Also known as reverse payments, these settlements typically involve payments from a brand drug manufacturer to a generic drug manufacturer to settle patent litigation that would jeopardize the brand manufacturer’s legal, patent-protected monopoly. In FTC v. Actavis, a five-member majority of the Court held that such payments may violate the antitrust laws and should be evaluated under the rule of reason. Several courts of appeals had held that reverse payments could not be anticompetitive if they fell within the scope of the patent’s exclusionary protection – a position the dissent would have adopted. This is a significant decision in an area of law that is likely still not settled – district courts will have their hands full applying antitrust’s rule-of-reason in the patent litigation settlement context, and several Senators are pushing legislation to end reverse payments.

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