Academic Affiliates File Amicus Curiae Brief on the Antitrust Treatment of Pharmaceutical Patent Infringement Settlements

May 12, 2016

On May 10, 2016, a group of prominent academic economists, including Professors Roger Blair, Iain Cockburn, Henry Grabowski, Keith Hylton, John Rizzo, Edward Snyder, and Michael Wohlgenant, filed an amicus curiae – or “friend of the court” – brief with the US Court of Appeals for the Third Circuit in the Wellbutrin XL Antitrust Litigation.  At issue in this litigation is the proper interpretation of the Supreme Court's 2013 decision in FTC v. Actavis, which established that so-called “reverse payment settlements” between brand and generic manufacturers should be subject to antitrust scrutiny under the rule of reason.  In particular, the brief addressed whether a “truncated” rule of reason that focused solely on the amount of the alleged payment would be an appropriate way to evaluate the competitive effects of a settlement agreement.

The authors of the brief argue that such a truncated approach would not be appropriate from an economic perspective.  They explain that brand companies may be willing to provide consideration to patent challengers for reasons other than delay, and that the inclusion of a payment in a patent litigation settlement does not necessarily result in a delay in generic entry beyond what might be expected under litigation.  The authors also argue that any payment that may be included in a settlement agreement cannot be evaluated in isolation, and that all elements of the agreement should be considered.  Finally, the authors discuss the role of patents in promoting pharmaceutical innovation, and conclude that the use of a truncated rule of reason would likely decrease the value of patent rights and discourage innovation in the pharmaceutical industry.

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