Pleading Standards: The Hidden Threat to Actavis

Posted by Social Science Research Network

Pleading Standards: The Hidden Threat to Actavis Michael A. Carrier (Rutgers University)

Abstract: In FTC v. Actavis, the Supreme Court held that a brand drug company’s payment to a generic firm to settle patent litigation and delay entering the market could violate the antitrust laws.

Since the decision, the issue of the pleading requirements imposed on plaintiffs has slipped under the radar. Along those lines, it is concerning that courts recently have imposed unprecedented hurdles. For example, the court in In re Effexor XR Antitrust Litigation failed to credit allegations that a generic delayed entering the market because a brand promised not to introduce its own “authorized generic” that would have dramatically reduced the true generic’s revenues. The same judge, in In re Lipitor Antitrust Litigation, dismissed a complaint despite allegations that the generic delayed entry in return for the brand’s forgiveness of hundreds of millions of dollars in potential damages in separate litigation.

This Essay explains why the excessive pleading standards in Effexor and Lipitor are not consistent with Actavis or the leading caselaw on pleading. It discusses cases that apply a more justifiable analysis. And it concludes that the imposition of inappropriate pleading standards significantly weakens the antitrust analysis of potentially anticompetitive settlements.