FTC, Split Circuit Courts Raise Questions About Legality of Pharmaceutical Patent Suit Settlements

In a prepared statement before the U.S. House Committee on the Judiciary Antitrust Task Force on July 24, 2003, Federal Trade Commission ("FTC" or "Commission") Chairman Timothy Muris identified health care as one of three FTC target markets because they "have the biggest impact on consumers."¹ As part of its overall strategy with respect to the health care market, the FTC has challenged agreements between drug manufacturers that were executed in connection with patent infringement litigation triggered by a generic drug manufacturer’s application to the Food and Drug Administration ("FDA") for approval of a generic drug under what commonly is known as the Hatch-Waxman Act.² These agreements typically include so called "reverse" payments – i.e., payments made by a patent holder to an alleged infringer to settle patent infringement litigation. Courts have recognized the validity of "reverse payments" in this context, and therefore some courts have applied a "rule of reason" analysis to