In Re K-Dur Antitrust Litigation: Pharmaceutical Reverse Payment Settlements Go Beyond the “Scope of the Patent”

January 8, 2013
Reverse payment settlements occur in patent infringement suits by innovative drug manufacturers against potential generic manufacturers under the Hatch-Waxman Act, where the innovator pays the generic and the latter agrees to delay market entry. Three circuit courts have endorsed such settlements under the “scope of the patent” (“SOP”) test. In In re K-Dur Antitrust Litigation, the Third Circuit rejected the SOP test, holding that reverse payment settlements are presumptively illegal. Reverse payment settlements typically involve monopoly sharing and warrant antitrust scrutiny. K-Dur’s presumptive illegality approach, as compared to the extremely deferential SOP test, the over-inclusive per se approach, or the prohibitively complex full “rule of reason” analysis, is the best practicable judicial approach. Congress and the federal agencies should implement policies to enhance public interest in both a fair competitive market and innovative drug development.