The Role of Antitrust Principles in Patent Monopolies: The Third Circuit Applies Antitrust Scrutiny to No-AG Patent Settlements in Smithkline

Abstract

On June 26, 2015, in King Drug Co. of Florence v. Smithkline Beecham Corp., the U.S. Court of Appeals for the Third Circuit held that no-authorized generic agreements (“no-AG agreements”), in which a pioneer pharmaceutical manufacturer agrees not to introduce a generic drug, are subject to antitrust scrutiny under the Sherman Act. This Comment argues that the Third Circuit correctly extended the U.S. Supreme Court decision in Federal Trade Commission v. Actavis to non-cash settlement agreements. In Actavis, the Court held that a “reverse-payment settlement,” which compensates a generic manufacturer to delay market entry, creates monopolistic consequences and is subject to antitrust scrutiny. To rule otherwise would deter manufacturers from introducing generic drugs into the pharmaceutical market and, consequently, restrict the amount of lower cost generic drugs available to consumers.