By Caitlin Forsyth
As the Washington Legal Foundation has explained, “[t]he right to enter into agreements concerning the use of a patented invention on any terms that do not extend the patent’s scope is one of the oldest and most secure of all patent rights.” That right, however, has lost most of its meaning with the Supreme Court’s recent decision in FTC v. Actavis.
In Actavis, Solvay Pharmaceuticals obtained a patent for its brand-name drug AndroGel. Later, Actavis and Paddock filed applications for generic drugs modeled after AndroGel pursuant to the Hatch-Waxman Act. In their applications, Actavis and Paddock certified that the generics would not infringe Solvay’s patent, as they were challenging the validity and scope of the patent. Solvay sued Actavis and Paddock, claiming patent infringement. The FDA eventually approved Actavis’s generic product, but instead of bringing its drug to market, Actavis entered into a “reverse payment,” also known as a “pay for delay,” settlement agreement with Solvay. Actavis agreed not to bring its generic to market for a specified number of years. Other generics manufacturers made similar agreements with Solvay.
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