In recent years, the Federal Trade Commission (“FTC” or the “Commission”) has investigated several settlement agreements between pioneer and generic drug manufacturers involving “reverse payments.” In the view of the FTC, reverse payments are cash that a pioneer drug manufacturer pays to a generic manufacturer who has challenged the patent(s) protecting the pioneer drug, in exchange for the generic manufacturer’s agreement to delay market entry. Such payments sometimes occur in the settlement of patent infringement actions. The Commission has been extremely skeptical of reverse payments, viewing them as objective indicia of intent to illegally share monopoly profits that the delayed generic entry perpetuates. It has successfully challenged settlement agreements that included reverse payments involving the market entry of generic Cardizem (hypertension treatment) and generic Hytrin (hypertension and angina treatment).


Antitrust and Trade Regulation

Date of this Version

March 2005