U.S. Court of Appeals for the Second Circuit invites petitions for en banc rehearing in reverse payment settlement case

On 29 April 2010 the U.S. Court of Appeals for the Second Circuit affirmed a lower court decision finding that reverse payment settlements did not violate antitrust laws, as they did not extend beyond the scope of the patent in question. However, the Court invited petitions for rehearing en banc and indentified several issues with the approach adopted in its earlier decision (In re Tamoxifen Citrate Antitrust Litigation, 466 F.3d 187 (2d Cir. 2005)), by which the panel in this case is bound (See Newsletter 4/2009 p. 2 for background of the present case and an amicus brief filed by the U.S. Department of Justice advocating a change to the Tamoxifen approach).

In support of why this case would be suitable for rehearing en banc, the Court noted that, first, the United States has in its amicus brief called into question the antitrust standards adopted in the Court’s earlier Tamoxifen case (and also applied by some other Circuit courts). Second, the Court noted that, as an empirical matter, reverse payment settlements appear to have increased after the Court’s 2005 ruling – a phenomenon the Court at the time thought would be rare. Third, the Court noted that even a principal drafter of the Hatch-Waxman Act (Senator Hatch) has criticized the settlements in question. Fourth, the Court recognized that its 2005 ruling was based an interpretation of the Hatch-Waxman Act that subsequently has turned out to be erroneous in that, unlike the Court then believed, only the first filer of an Abbreviated New Drug Application (“ANDA”) – and not for instance others following a settlement with the first generic manufacturer to file an ANDA – is eligible for a 180-day exclusivity period.

The Federal Trade Commission has filed an amicus brief supporting rehearing en banc of the case. [Juha Vesala]