Mitchell IP Law Alert – Pay To Delay: FTC Finally Bags A Big One

Mitchell Intellectual LawThose engaged in the generic drug business are well familiar with the long term efforts by the Federal Trade Commission to obtain a significant anti-trust judgement in a so-called “Pay to Delay” action.  Cephalon Inc. agreed Thursday to pay $1.2 billion to settle a long-running antitrust suit.  Cephalon was accused of paying generic drug makers to hold off on launching their generic versions of the narcolepsy drug Provigil.  The Cephalon settlement is seen as a major victory for the FTC in its long campaign against so-called pay-for-delay patent settlements.

This settlement does not, however, change the law on such settlements.  In FTC v. Actavis, Inc. (Supreme Court 2013), the Supreme Court ruled 5-3 that such reverse payment settlements are not prima facie a violation of the anti-trust laws. If a pay to delay settlement is reasonable in scope and duration, and affords pro-competitive benefits, it will not be found to violate the anti-trust law.  Such settlements will continue to play a major role in Paragraph iv litigation settlements.