In Louisiana Wholesale Drug Co. Inc. v. SmithKline Beecham Corp. et al., District of New Jersey Judge William H. Walls dismissed a putative class action against leading drug makers alleging that the patent holder improperly promised not to introduce its own generic version of the drug as part of a settlement delaying the entry of a generic competitor. Judge Walls held that the Third Circuit’s recent decision subjecting so-called pay-for-delay pharmaceutical patent settlements to tougher antitrust scrutiny only applied to deals including cash payments.
Although the Federal Trade Commission in an amicus brief urged the court to extend the Third Circuit’s ruling, Judge Walls concluded that the defendants’ deal involved negotiated dates for generic entry, not cash payments. “This is exactly the type of settlement,” the court explained, “that is not subject to antitrust scrutiny.” To be sure, the patent holder’s agreement not to introduce its own generic during the exclusivity period is a benefit to the generic producer. Citing the Third Circuit’s repeated references to cash payments, the court concluded that non-cash benefits are permissible. After all, the court stressed, some benefit is always necessary to secure an agreement.
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