Managing Principal Pierre Cremieux Comments on Supreme Court Decision on the Treatment of Pay-for-Delay Settlements

June 21, 2013

Analysis Group Managing Principal Pierre Cremieux, Ph.D., was one of several economists and attorneys participating in a recent teleseminar on reverse payment (sometimes known as pay-for-delay) patent settlements. The panel discussion, hosted by the ABA Antitrust Section's Health Care and Pharmaceuticals Committee, was focused on the U.S. Supreme Court's June 18, 2013 decision in Federal Trade Commission v. Actavis, Inc., et al

In a 5--3 opinion, the Court declined to hold that reverse payment settlement agreements are presumptively unlawful but also declined to adopt the scope of the patent rule. Instead, the justices said courts reviewing such agreements "should proceed by applying the 'rule of reason,' rather than … a 'quick look' approach." The Court also said it would "leave to the lower courts the structuring of the present rule-of-reason antitrust litigation," thereby leaving room for lower courts to consider a range of factors -- such as the strength of the patent, the risk aversion of the parties, the value of any contemporaneous business agreements, and trial uncertainties -- when evaluating the antitrust implications of a settlement agreement that includes reverse payments.

Dr. Cremieux noted that the Court's decision was made within "a rapidly changing economic environment, with brands purchasing generics and generics purchasing brands, with the move toward biologics, and with different patterns of investment research. … So the decision may not be quite as important five years from now as we perceive today, because the world will be changing as the economic incentives do."

Dr. Cremieux also discussed pay-for-delay issues in a webinar hosted by Ballard Spahr LLP on June 25, 2013, titled "Antitrust Challenges to Patent Settlements after FTC v. Actavis." He and several other panelists outlined the Court's decision and assessed its impact on future antitrust cases.

Dr. Cremieux and several Analysis Group consultants and academic affiliates earlier this year filed an amicus curiae brief in support of Actavis in this matter. 

Read more about the amicus curiae brief