Supreme Court Decides "Reverse Payments" Case

Today the Supreme Court decided FTC v. Actavis, the "reverse payments" case. This case arises in generic drug litigation, where the patent owner pays the accused infringer to stay out of the market until the patent expires.  Because the settlement requires the patent owner to pay the alleged infringer, rather than the other way around, this kind of settlement agreement is often called a “reverse payment” settlement agreement. The lower courts have struggled with whether this violates the antitrust laws.

In today's opinion, the Supreme Court reverses the 11th Circuit, which had dismissed the FTC's antitrust complaint.  However, the Court declines to hold that reverse payment settlements are presumptively unlawful. Rather, they are to be reviewed under the rule of reason analysis. The FTC will be given a chance to prove its case. The vote was 5-3, with the majority opinion by Justice Breyer (Justice Alito is recused). 

SCOTUSblog reports that this potential antitrust exposure "is likely to essentially put an end to such payments in the future."  In the long run, this will hopefully make generic drugs more widely available.