On Monday, the U.S. Court of Appeals for the Second Circuit upheld the dismissal of a lawsuit involving antitrust allegations against several companies. The case revolved around the question of “reverse” settlement payments, as the companies involved supposedly utilized them to stall the market introduction of generic variants of a hypertension drug. For the Second Circuit Court, this was a landmark decision.
The ruling served as a significant clarification of a previous Supreme Court decision made in 2013. This earlier ruling established that such “pay-for-delay” agreements could be deemed unlawful if proven to be substantial and “unjustified.” However, the specifics regarding when such deals cross legal boundaries remained rather opaque up until this recent ruling by the Second Circuit Court.
The appeals court declared that in this case, the settlement payments represented a fair value for goods or services within a commercial relationship, and are thus justified. The decision depended heavily on the precedent set by the Supreme Court in the matter of “Federal Trade Commission v. Actavis”. This significantly adds to our understanding of how courts interpret ‘pay-for-delay’ deals and could very likely influence future litigations of the same nature.