Activating Actavis: Economic Issues in Applying the Rule of Reason to Reverse Payment Settlements

22 November 2013
Dr. Sumanth Addanki with Dr. Henry N. Butler, George Mason University School of Law

In FTC v. Actavis, Inc., the Supreme Court reversed the Eleventh Circuit’s decision, rejecting the so-called scope-of-the-patent test for reverse payment settlements in Hatch-Waxman pharmaceutical litigation. It also rejected the Federal Trade Commission and Third Circuit’s arguments for presumptive illegality of reverse payments, declaring that the rule of reason is the appropriate framework in which to evaluate such settlements. In doing so, the Court provided little guidance on how such analyses should be carried out, leaving it to lower courts to develop the analytical framework in which to assess these settlement agreements.

In this article (published in the Minnesota Journal of Law, Science & Technology, Vol. 15, No. 1, Fall 2013), NERA’s Dr. Sumanth Addanki joins Dr. Henry N. Butler (George Mason University Foundation Professor of Law and Executive Director, Law & Economics Center, George Mason University School of Law) to discuss the economic and legal underpinnings of the relevant issues and offer some guidance on the key economic questions that lower courts will need to assess as they proceed under the rule of reason.