Supreme Court Wants “Rule Of Reason” To Govern Payments To Generics

The popular version is “they pay off the generics to keep them out of the market.” The Supreme Court doesn’t totally dismiss this notion in its recent Federal Trade Commission v. Actavis, Inc. decision, but it says that’s only part of the story in what’s known as a “reverse payment” patent settlement, which includes a payment from a branded pharmaceutical patent holder to a generic producer that it has targeted with an infringement suit. The Court said a reverse payment may be beneficial, and it may be anti-competitive, and each case should be subject to a rule-of-reason analysis. It leaves that analysis to the lower courts, and thus it also leaves plenty to litigate about on this issue for the foreseeable future.