Analysis Group Antitrust Economists File Amicus Curiae Brief Regarding the Evaluation of Pharmaceutical Patent Infringement Settlement Agreements

March 9, 2016

On February 23, 2016, a group of antitrust economists that included Analysis Group senior staff members Paul Greenberg, Mark Lewis, Richard Mortimer, and Bruce Stangle, and professors James Hughes, Keith Hylton, Edward Snyder, and Michael Wohlgenant, filed an amicus curiae – or friend of the court – brief with the Third Circuit Court of Appeals in regard to the Effexor XR 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 this case, the settlement agreement that ended the Effexor XR patent infringement litigation involved an agreement by the brand manufacturer not to market an authorized generic of its own during the generic entrant's exclusivity period, but also a promise of royalty payments from the generic manufacturer to the brand manufacturer. In labeling the challenged agreement a reverse payment, however, plaintiffs focused on only one element of the agreement – the brand's promise not to market an authorized generic version of Effexor XR – and did not consider the royalty payments promised by the generic manufacturer.

The authors of the brief argue that all elements of the settlement agreement should be considered when plaintiffs allege that payments made under a settlement agreement are “large and unexplained” as required by the Actavis decision. The authors argue that “permitting a plaintiff to initiate costly litigation by focusing on a single term of a settlement agreement … while ignoring other elements of the same settlement … could result in negative economic outcomes” by exposing “a wide range of settlements terms to challenge under antitrust laws.”

Read the amicus brief