Brief Amici Curiae of 58 Law, Economics, and Business Professors in Support of Appellants’ Petition for Panel Rehearing or Rehearing En Banc

Posted by Social Science Research Network

Brief Amici Curiae of 58 Law, Economics, and Business Professors in Support of Appellants’ Petition for Panel Rehearing or Rehearing En Banc

By Michael A. Carrier (Rutgers Law School)

Abstract:     In re Wellbutrin XL Antitrust Litigation, a Third Circuit panel, in evaluating a drug patent settlement, required the plaintiffs to show definitively that the brand’s patent was invalid or not infringed, which would have allowed the generic to enter the market earlier absent the settlement. This brief offers four critiques of the decision.

First, the decision makes multiple unsupported assumptions: it requires a “dispositive” connection between payment and patent weakness; it carves out special rules—nowhere found in FTC v. Actavis—for “complex and multi-faceted” settlements; it accepts risk-based defenses rejected in Actavis; and it finds holdings adopted in Actavis “effective[ly] rebutt[ed]” by arguments rejected in the case.

Second, the panel decision contradicts the Supreme Court’s landmark decision in Actavis. In that decision, the Court emphasized antitrust’s vital role in evaluating settlements by which brand firms pay generics to delay entering the market. In findings ignored by the panel, the Court treated a large and unjustified payment as a “surrogate” for a patent’s weakness and made clear that settling parties could not defend their payment on the grounds that it would avoid the risk of losing the patent case.

Third, the panel decision is not consistent with decisions of the Third Circuit. In King Drug, the Third Circuit extended the Supreme Court’s rejection of a risk-aversion defense to “no authorized generic” agreements by which brands promise not to introduce their own generics that would compete with “true” generics. And less than two weeks after the decision, the Third Circuit reached a conclusion contrary to the panel in In re Lipitor Antitrust Litigation, making clear that a payment’s size “may very well correspond with the magnitude” of a “patent holder[’s] concern[] about the validity of its patent” and finding that the brand’s forgiveness of the generic’s damages in a separate case “was ‘large’ enough to permit a plausible inference” that the brand “had serious doubts about the ability of [its] patents to lawfully prevent competition.”

Finally, the panel decision is not consistent with the policies of the relevant regulatory regimes. The Hatch-Waxman Act, Congress’s framework balancing competition and innovation in the pharmaceutical industry, promotes generic competition by encouraging challenges to invalid patents. Such challenges also reflect the important policy, found in patent law itself, of challenging patents.

The brief concludes that for all of these pressing reasons, the petition for panel rehearing or rehearing en banc should be granted.

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