Reversing Reverse Payments: The Actavis Decision

Branded pharmaceutical companies are often caricatured as the greedy, profit-seeking bad guys who jack up prices on life-saving medicines, modern day Bad King Johns deputizing an unfair patent system as their personal sheriffs of Nottingham. Meanwhile, the companies that make generic copies of those drugs are typically painted as today’s Robin Hoods. But what happens when the figurative Robin Hood and King John make common cause? Such was the case in real life as opposition to so-called “reverse settlements” in pharmaceutical patent cases finally bore fruit in a recent ruling. In Federal Trade Commission v. Actavis, the Supreme Court for the first time applied antitrust scrutiny to payments by branded drug companies to their generic competitors. The ruling, while cheered by many Robin Hood fans, chips away at patent protection for innovators and appears likely to hinder, at least slightly, the development of new drugs for no real public benefit.

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