Reverse Payment Issue Continues to Sizzle

We reported recently that the issue of reverse settlement payments to generic drug manufacturers was continuing to heat up this summer.  FTC Chairman Jon Leibowitz’s recent comments on the issue further support this forecast. In a speech before the Center for American Progress, Leibowitz stated that the FTC "has made stopping these deals a top priority," and he urged Congress to do the same.

Reverse settlement payments occur after a brand-name drug manufacturer sues a generic manufacturer for patent infringement. In settling the case, the companies enter a "pay-for-delay" agreement, whereby the generic accepts a payment to stay out of the marketplace for a certain period of time.
 

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Reverse Payments - Hot Button Issue

The issue of a patent litigation settlement in the form of payments by a brand name drug company to the defendant to delay marketing a generic version of its brand name counterpart is heating up this summer. Indeed, it is currently both before the Supreme Court and Congress.

A group of indirect purchasers filed a petition with the Supreme Court seeking review of the Federal Circuit’s decision in In Re:Ciprofloxacin finding that Bayer’s $398 million payment to Barr and Hoechst Marion Roussel (now Sanofi-Aventis) to delay marketing a generic version of a drug did not violate federal antitrust laws. Arkansas Carpenters Health and Welfare Fund is asking the court to determine whether reverse payments to settle patent litigation are per se lawful without regard to the amount paid or strength of the underlying patent challenge. This is the third time the issue of reverse payments has been brought to the Supreme Court. The Court refused to hear the prior two cases.
 

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