Antitrust Partner Laura Shores Discusses Recent District Court Decision on Reverse Payments in Global Competition Review

Global Competition Review reports that Judge William Walls of the District of New Jersey recently ruled in the In re Lamictal antitrust litigation that only reverse payments that involve cash are subject to scrutiny under antitrust laws, according to his reading of last year’s Supreme Court decision in Federal Trade Commission v. Actavis.

According to Kaye Scholer Antitrust Partner Laura Shores, Judge Walls’s reading of Actavis is unsurprising, given that he has treated monetary payment as crucial in the past. “The Supreme Court's decision in Actavis doesn't say explicitly that it only applies to a reverse monetary payment, but it uses the words ‘money’ or ‘monetary’ throughout the opinion, and the underlying facts involved a cash payment of hundreds of millions of dollars,” she said.

Shores pointed out that “New Jersey is the first district court to consider whether a promise not to market an authorized generic, standing alone, constitutes a reverse payment, but the issue has been broached in at least three other cases.” She added that “the idea that a no-authorized-generic promise constitutes a reverse payment has its own line-drawing problem.”

“As Judge Walls said, any first year law student knows that every contract has to have consideration. If you view this promise as reverse payment, what's to stop you from saying any other consideration is reverse payment? If everything can be construed as a reverse payment, then the analysis under Actavis doesn't make any sense,” Shores concluded.