Federal judge limits antitrust scrutiny of pharmaceutical reverse payments to settlements involving monetary transfers

Recently, a federal judge in the US District Court for the District of New Jersey held that only patent settlements involving a reverse monetary payment will be subject to antitrust scrutiny under the framework articulated by the Supreme Court last year in FTC v Actavis. In affirming its earlier ruling dismissing the direct purchaser complaint, the court held that nothing in Actavis altered the conclusion it had reached previously under the US Court of Appeals for the Third Circuit’s ruling in In re K-Dur Antitrust Litigation that the settlement did not, in fact, contain a reverse ‘payment’ because there was no transfer of money between the parties. This most recent development in the ongoing debate regarding these agreements is significant not only because it is the latest effort by the courts to clarify and develop the framework put in place under Actavis but also because it constitutes a departure from other recent district court rulings that have suggested that Actavis may apply to non-monetary forms of compensation.

The agreements at issue in the case settled patent litigation between GlaxoSmithKline (GSK) and Teva Pharmaceuticals related to GSK’s drug, Lamictal, which is used to treat epilepsy and bipolar disorder and is available in chewable and tablet forms. Under the terms of the agreement, Teva was permitted to sell generic chewables approximately 37 months prior to expiration of the relevant patent and generic tablets approximately six months prior to patent expiration. GSK also granted Teva an exclusive licence to the relevant Lamictal patent, which was exclusive even as to GSK during Teva’s first-filer exclusivity period. The result of this provision was that GSK would not compete with Teva through marketing of an authorised generic version of Lamictal in either chewable or tablet formulations during that period of time…

Click on the link below to read the rest of the Hogan Lovells briefing. 

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