Antitrust Law Daily Wrap Up, ANTITRUST NEWS: AAI lauds “structured” rule of reason approach in pharmaceutical reverse-payment settlement ruling, (May 8, 2015)

The American Antitrust Institute (AAI) is praising yesterday’s California Supreme Court ruling, applying a “structured” rule of reason approach to pharmaceutical reverse-payment settlements (In re Cipro Cases I & II). These are settlements whereby a brand manufacturer pays a substantial sum to a generic challenger to drop its patent challenge and stay out of the market for a period of time. Such settlements cost consumers and governments billions of dollars in higher drug costs, according to the Federal Trade Commission. The AAI had filed an amicus brief in the case, urging adoption of the reasoning used by the court.

The Cipro court held that plaintiffs could establish a prima facie antitrust violation by showing that a patent settlement limited the generic challenger’s entry in the market and that the brand manufacturer made a payment to the generic in excess of the brand’s expected remaining litigation costs and the value of any collateral goods and services provided by the generic to the brand.

“This is an important victory for consumers in the battle over reverse-payment settlements and should have positive implications for cases brought under federal antitrust law,” said AAI Vice President and General Counsel Richard Brunell.

Companies: Bayer AG; Bayer Corporation; Barr Laboratories, Inc.

News: Antitrust CaliforniaNews