Supreme Court Says ‘Reverse Payment’ Generic Drug Settlements Are Subject to Rule of Reason Antitrust Review

18 June 2013
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Key takeaways:

  • In a 5 to 3 decision, the Court held that “reverse payment” settlement agreements, in which patent holders pay generic drug producers to delay introduction of an allegedly infringing drug, are subject to antitrust challenge under rule of reason analysis.
  • The Court rejected the Federal Trade Commission’s proposed “quick look” test, which would have treated such arrangements as presumptively unlawful, and instead required courts to apply the traditional rule of reason, determining whether the benefits of settlement outweigh the potential harm to competition.