The Antitrust Legality of Pharmaceutical Patent Litigation Settlements

James F. Ponsoldt, University of Georgia School of Law
W. Hennen Ehrenclou, Weinstock and Scavo PC

University of Illinois Journal of Law, Technology & Policy, Vol. 2006, No. 1 (2006), pp. 37-61


Several federal courts of appeal have ruled recently on the issue of whether a pharmaceutical patent infringement settlement, pursuant to which a generic drug manufacturer agrees to forgo marketing a particular drug in return for monetary payments from a patent-holding "pioneer" drug manufacturer, is a violation of antitrust law. These payments are termed "reverse payments" because, contrary to normal settlements, the plaintiff makes a lump sum payment to the defendant. Reverse payments have sparked considerable academic comment and controversy. Even more recently, the Federal Trade Commission and the Solicitor General have expressed views on the issue, in the context of the Schering-Plough litigation.

This Article describes the regulatory framework underlying reverse payment settlement agreements and the patent infringement litigation from which they derive. It then examines cases that have addressed the antitrust issues created by reverse payments. It compares academic commentary on the relevant antitrust issues. Finally, this Article assesses the most recent decisions by the Second and Eleventh Circuits.