On June 17, 2013, the U.S. Supreme Court released its decision in Federal Trade Commission v. Actavis, Inc., in which it considered the presumptive validity (or invalidity) of so-called reverse payment settlement agreements between branded pharmaceutical manufacturers and their generic competitors. FTC v. Actavis Inc., No. 12-416, 133 S. Ct. 2223 (June 17, 2013).
The Actavis case concerned a patent infringement settlement between Solvay Pharmaceuticals, which had obtained a patent for its brand name drug AndroGel, and Watson Pharmaceuticals (a predecessor of Actavis), which had filed an application for approval to manufacture and sell a generic version of AndroGel based on the alleged invalidity of Solvay’s patent.
However, after receiving regulatory approval to do so, Watson entered into a settlement agreement with Solvay under which Watson agreed not to market generic AndroGel until 2015 — five years before the expiry of the AndroGel patent — and to promote AndroGel sales to doctors. Solvay agreed to share a portion of its AndroGel profits with Watson, which could result in an annual payment to Watson of up to $30 million per year.
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