Business Intelligence

Policy Reversal On Reverse Payments: Why Courts Should Not Follow The New DOJ Position On Reverse-Payment Settlements Of Pharmaceutical Patent Litigation

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Executive Summary

In a recent policy reversal, the Department of Justice has, for the first time, pursued antitrust liability for "Reverse payment" settlements. These settlements occur in the pharmaceutical industry when brand-name and generic-drug companies settle patent-infringement litigation. In a reverse-payment settlement, the generic-drug company agrees not to enter the market for some period of time and the patent holder agrees to give it something of value - often quarterly cash payments. The DOJ claims that such settlements should be analyzed under the rule of reason but in fact seeks an unwarranted presumption that reverse payments are unreasonably anticompetitive.

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