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The Curious Case of Wellbutrin: How the Third Circuit Mistook Itself for the Supreme Court

FTC v. Actavis was one of the most important antitrust cases of the modern era. In one fell swoop, the Supreme Court ensconced antitrust’s role in analyzing settlements by which brand firms pay generics to delay entering the market. The Court underscored the harms presented by large and unjustified payments and rejected some of the prized justifications that settling parties had previously offered.

Since Actavis, the lower courts have begun to flesh out the antitrust analysis of drug patent settlements. In particular, the federal appellate courts have held that “payment” extends beyond cash to noncash forms of consideration and have liberally interpreted the pleading requirements for noncash conveyances.

A recent opinion, however, threatens the orderly development of the post-Actavis caselaw. In analyzing plaintiffs’ claim of antitrust injury in In re Wellbutrin XL Antitrust Litigation, a Third Circuit panel mistook itself for the Supreme Court. The plaintiffs had alleged that the generic would have entered the market earlier if not for the settlement, but the Third Circuit found that they could not make such a showing because they did not definitively prove that the patent was invalid or not infringed. The panel only reached this conclusion, however, by studiously ignoring the evidence of a large and unjustified payment that the Supreme Court had indicated was a surrogate for the patent’s weakness and accepting a defense based on avoiding risk that the Supreme Court had rejected.

This Essay first provides a background on pharmaceutical patent settlements. It then discusses the Actavis and Wellbutrin cases. Finally, it shows how the Third Circuit panel issued a ruling that was based on inappropriate assumptions and is inconsistent with Supreme Court caselaw, Third Circuit precedent, and relevant regulatory policies.

 

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