FTC v. Actavis, Inc.

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FTC v. Actavis, Inc. is a landmark United States Supreme Court case that addressed the issue of pay-for-delay settlements, also known as reverse payment settlements, in the pharmaceutical industry. The case was decided on June 17, 2013, and has significant implications for antitrust law and the pharmaceutical industry.

Background

The case originated from a dispute between the Federal Trade Commission (FTC) and Actavis, Inc., a pharmaceutical company. The FTC challenged a settlement agreement between Actavis and Solvay Pharmaceuticals, the manufacturer of the brand-name drug AndroGel. Solvay had sued Actavis for patent infringement after Actavis filed an Abbreviated New Drug Application (ANDA) to market a generic version of AndroGel. Under the terms of the settlement, Actavis agreed to delay the release of its generic drug until 2015, in exchange for substantial payments from Solvay. The FTC argued that this agreement was anticompetitive and violated antitrust laws by delaying the entry of cheaper generic drugs into the market.

Supreme Court Decision

The Supreme Court, in a 5-3 decision, held that pay-for-delay settlements could be subject to antitrust scrutiny. The majority opinion, written by Justice Stephen Breyer, stated that such agreements are not immune from antitrust attack and should be evaluated under the "rule of reason" standard. This standard requires courts to conduct a case-by-case analysis to determine whether the settlement unreasonably restrains trade. The Court rejected the argument that these settlements were immune from antitrust scrutiny simply because they fell within the scope of the patent. Instead, the Court emphasized the need to balance the pro-competitive benefits of patent settlements with the potential anticompetitive effects of delaying generic drug entry.

Implications

The decision in FTC v. Actavis, Inc. has significant implications for both antitrust law and the pharmaceutical industry. It opened the door for increased antitrust enforcement against pay-for-delay settlements, potentially leading to more generic drugs entering the market sooner and reducing drug prices for consumers. Pharmaceutical companies must now carefully consider the antitrust implications of their settlement agreements, and the FTC has been more aggressive in challenging such agreements since the decision.

See Also

• Antitrust law
• Pharmaceutical industry
• Patent infringement
• Federal Trade Commission
• United States Supreme Court