Reverse Payment Settlements in the United States and Europe: Moving Toward An Effects-Based Approach

David Tayar, William Rooney, Agathe Richard, Sep 30, 2013

After more than a decade of debate and complex litigation on “reverse payment” settlements, the Supreme Court ruled on the issue in Federal Trade Commission v. Actavis, Inc. The pharmaceutical industry now asks: So, are those settlements lawful? The Actavis Court’s answer: “Maybe . . . sometimes.”

The lower courts are now commissioned to apply the decades-old rule of reason to reverse payment settlements and, in the process, to advance important antitrust and intellectual property interests.

At almost the same time that the Supreme Court issued the Actavis decision, the European Commission announced its Lundbeck decision that found a collection of reverse payment settlements unlawful. Vice President Almunia lauded a convergence of the U.S. and European approaches to the arrangements: case-by-case and factually intensive.

This article reviews Actavis and the European announcement on theLundbeck decision. It then discusses the case-by-case approach that lower courts in the United States and future Commission decisions might employ in evaluating reverse payment settlements and advancing antitrust and patent policy objectives.

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