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District Court Holds That Under FTC v. Actavis, “Pay for Delay” Means Money

January 30, 2014

Summary: In one of the first cases to apply the United States Supreme Court’s landmark decision in FTC v. Actavis, Inc., 133 S. Ct. 2223 (June 17, 2013), to a “pay-for-delay” pharmaceutical patent litigation settlement, the United States District Court for the District of New Jersey held on January 24, 2014 that a settlement must provide for a monetary “reverse payment” to the generic firm to warrant antitrust scrutiny. In re: Lamictal Direct Purchaser Antitrust Litig., No. 12-cv-995. Specifically, the court ruled that a promise by the branded manufacturer that it will not market its own “authorized” generic in competition with the generic firm’s product does not, standing alone, constitute a payment. In doing so, the court rejected the position advanced by the Federal Trade Commission, which has argued that a “no-AG” promise functions no different from a straight monetary payment, since it guarantees the generic firm millions in sales upon entry. Lamictal is the first case to declare that Actavis applies only to settlements providing for a payment of money, and also the first to squarely address the no-AG issue. 

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