U.S. Supreme Court Amicus Brief
Professor David Opderbeck and Vice Dean Erik Lillquist
Professor David Opderbeck (pictured, left) and Vice Dean Erik Lillquist (pictured, below left), both Directors of Seton Hall Law School’s Gibbons Institute of Law, Science & Technology, submitted an amicus brief to the U.S. Supreme Court in the case of Federal Trade Commission v. Actavis, Inc., et al., on the insufficiency of the FTC’s proposed “quick look” approach for evaluation of reverse payment or “pay-for-delay” settlements in the pharmaceutical patent context in what is often referred to as “Hatch-Waxman patent litigation.” Counsel on behalf of the Gibbons Institute is David De Lorenzi and Jillian Centanni of Gibbons P.C.
In reverse payment or “pay for delay” settlements under Hatch-Waxman, the owner of a patented drug pays a generic manufacturer for delayed entry of generic products that would compete with the patented drug.
At stake in Actavis is the FTC’s “quick look” proposal for evaluating reverse settlement agreements, largely stemming from a decision by the United States Court of Appeals for the Third Circuit (In re: K-Dur Antitrust Litig.,), in which It rejected the “scope of the patent test” and held that reverse-payment settlements should instead be subject to “quick-look” rule of reason antitrust scrutiny—and that payment from a patent holder to a generic manufacturer should be treated, presumptively, as an unreasonable restraint of trade.
In their Amicus brief to the U.S. Supreme Court, Professor Opderbeck and Vice Dean Lillquist note the absence in this proposed approach of any consideration of product market definition and argue that “Product Market Definition is an indispensable step in the antitrust evaluation of reverse payment settlements” and that, in summary,
The FTC’s proposed “quick look” approach is inadequate because it passes over a fundamentally important consideration: product market definition. Product market definition is basic to antitrust analysis under the rule of reason. Antitrust analysis of restraints such as license agreements involving patents routinely requires product market definition. The Court held in Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28, 126 S. Ct. 1281, 164 L.Ed.2d 26 (2006), that a finding that a tying arrangement involving a patent is unlawful “must be supported by proof of power in the relevant market rather than by a mere presumption thereof.” Id. at 43. The same should be true for reverse payment settlements. Pharmaceutical product markets are complex and often are not delimited by an individual molecule, making a “quick look” inadequate.
The Amicus brief concludes that:
“The FTC’s proposed presumptive illegality approach to evaluating reverse payment settlements should be rejected because it fails to consider the importance of product market definition.”