Brattle Principals Steven Herscovici and Lisa Cameron and Academic Advisor Professor Joshua Gans recently assisted in preparing an amicus brief in support of defendants-appellees Wyeth LLC and Teva Pharmaceutical Industries Ltd in In re: Effexor XR Antitrust, an antitrust case currently before the U.S. Court of Appeals for the Third Circuit. In their work on this brief, Drs. Herscovici and Cameron and Professor Gans supported attorneys Jonathan Hacker, Edward Hassi, and Burden Walker of O’Melveny & Myers.
Under the U.S. Supreme Court’s 2013 decision in FTC v. Actavis, plaintiffs can bring antitrust claims over “large” and “unjustified” payments from a branded pharmaceutical maker to a generic company that resolve patent litigation and delay the introduction of generic drugs. In their brief, the economists explain that in order to demonstrate that a so-called reverse payment was “large,” plaintiffs must account for the whole agreement, rather than isolate a single settlement term from that agreement.
In this case, plaintiffs claim that Wyeth’s promise that it would not launch a competing authorized generic (AG) during Teva’s six-month exclusivity period is the type of “unusual, unexplained reverse transfer of considerable value” from brand to generic that warrants antitrust scrutiny. The economists explain that in making this claim, the plaintiffs fail to recognize that Wyeth had granted Teva an exclusive license to produce Effexor XR and that it was receiving royalties in exchange for that license. One obvious economic explanation for Wyeth’s decision not to launch an AG is that Wyeth expected to be compensated by royalties garnered from Teva’s sale of the licensed product. Thus, plaintiffs cannot demonstrate that the ‘reverse payment’ plaintiffs allege is either ‘large,’ or ‘unexplained,’ or even a ‘reverse payment’ at all.”
The full brief may be viewed below.