An opinion issued on October 6, 2014, by Judge Sheridan of the United States District Court for the District of New Jersey further muddied the legal waters as to what type of “reverse payments” made by makers of brand-name pharmaceuticals to their generic competitors to settle patent litigation are subject to antitrust scrutiny under the Supreme Court’s decision in FTC v. Actavis. Judge Sheridan held that Actavis applies to non-monetary payments, such as a promise by the brand-name manufacturer in exchange for which the generic agrees to delay entry. Importantly, however, a non-monetary payment must be capable of being reliably converted to a monetary value so that it can be evaluated against the Actavis factors. Judge Sheridan’s holding runs counter to Judge Walls’s decision earlier this year in In re Lamictal Direct Purchaser Antitrust Litigation, which limited Actavis to reverse payments involving an exchange of cash and was the subject of a prior blog post.
In In re Effexor XR Antitrust Litigation, a class of direct purchasers alleged that defendant Wyeth made a reverse payment to defendant Teva to induce Teva to delay launching its generic version of Effexor by two years. This reverse payment was essentially an agreement not to compete, the plaintiffs alleged, as Wyeth promised Teva that it would not market its own generic version of Effexor during Teva’s 180-day exclusive sales period (which Teva had earned by being the first to seek FDA approval of such a generic) in exchange for Teva’s delay. The plaintiffs estimated that Wyeth’s promise was worth $500 million to Teva, based on the fact that Teva would face no price competition during its 180-day exclusivity period.