US antitrust cases continue to shape generic competition and pricing practices as policymakers seek to reduce drug costs

The past year has continued to see an increase in US case law and other developments in pharmaceutical antitrust. This article examines antitrust claims under the US Supreme Court's decision in FTC v Actavis for settlements of patent litigation involving alleged reverse payments or "pay for delay"; antitrust claims against innovator pharmaceutical companies that allegedly engage in so-called product hopping by introducing new versions of brand-name drugs facing generic competition; challenges to Orange Book patent listings that are allegedly improper; and pharmaceutical pricing developments and legal challenges.

Reverse-payment case law under Actavis

The US Supreme Court's decision in FTC v Actavis reshaped pay-for-delay litigation by requiring rule-of-reason scrutiny of "large and unjustified" value transfers tied to delayed generic entry. Reverse-payment claims generally allege that an innovator pharmaceutical company provided financial inducement to a potential generic competitor to settle patent litigation on terms that delayed entry or secured a later entry date than the generic company otherwise would have accepted, absent the innovator's financial inducement.

The majority opinion in Actavis rejected both extremes: the deferential ‘scope of the patent' test and the Federal Trade Commission's (FTC) proposed "quick look" rule of presumptive unlawfulness. Instead, the Supreme Court charted a middle course, holding that ‘the FTC must prove its case as in other rule-of-reason cases'.¹

In doing so, the Supreme Court expressly reserved an option for innovators to provide financial settlement consideration to generic companies beyond the value of early entry alone:

"Where a reverse payment reflects traditional settlement considerations, such as avoided litigation costs or fair value for services, there is not the same concern that a patentee is using its monopoly profits to avoid the risk of patent invalidation or a finding of noninfringement.^2"

The Supreme Court expressly delegated to the lower courts the task of figuring out how to apply the rule of reason to alleged reverse-payment settlements. In the years since, we have seen conflicting district court decisions, the first jury verdicts and several appellate decisions.

Pleading standards under Actavis

Following Actavis, some courts have concluded that a reverse payment may include certain non-cash transfers executed at or near settlement, such as no-authorised generic (no-AG) commitments, co-promotion, licensing, distribution or other side agreements.³ Although early post-Actavis decisions wrestled with how specifically plaintiffs must quantify non-cash value,⁴ several courts have since required allegations "sufficient to estimate the value" of the non-cash transfer.⁵

_{1 FTC v Actavis, Inc, 570 US 136, 159 (2013).
2 id., at 156.
3 See, eg, King Drug Co of Florence, Inc v Smithkline Beecham Corp, 791 F3d 388, 395 (3d Cir 2015) (Lamictal) (‘[T]his no-AG agreement falls under Actavis's rule'); In re Loestrin 24 FE Antitrust Litig, 814 F3d 538, 549 (1st Cir 2016) (Loestrin) (‘[T]he district court erred in determining that non-monetary reverse payments do not fall under Actavis's scope'); Picone v Shire PLC, No. 16-cv-12396, 2017 US Dist Lexis 178150, at *34-35 (D Mass 20 October 2017) (holding that a no-authorised generic agreement and a ‘sharply discounted royalty rate' may constitute a payment); In re Solodyn (Minocycline Hydrochloride) Antitrust Litig, No. 14-md-2503, 2015 US Dist Lexis 125999, at *33–43 (D Mass 14 August 2015) (holding that a settlement and licence agreement with upfront and milestone payments may constitute a payment); In re Aggrenox Antitrust Litig, 94 F Supp 3d 224, 242–43 (D Conn 2015) (holding that a ‘"payment" is not limited to cash transfers').
4 See, eg, In re Lipitor Antitrust Litig, 868 F3d 231, 255 n.11 (3d Cir 2017); United Food & Com Workers Local 1776 & Participating Emp'rs Health & Welfare Fund v Teikoku Pharma USA, Inc, 74 F Supp 3d 1052, 1070 (ND Cal 2014) (Lidoderm); In re Opana ER Antitrust Litig, 162 F Supp 3d 704, 718 (ND Ill 2016).
5 Loestrin, 814 F3d at 552 (internal quotation marks omitted) (quoting In re Actos End Payor Antitrust Litig, No. 13-CV-9244, 2015 US Dist Lexis 127748, at *43 (SDNY 22 September 2015)); see also In re Opana ER Antitrust Litig, 2016 US Dist Lexis 23319, at *29 (ND Ill 25 February 2016).}

This article was first published on Global Competition Review on 30 July 2026. To read the current edition of the review, please visit the GCR Antitrust Review of the Americas.

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