Drug Patents at the Supreme Court

Arguments for paying generic drug makers to abandon patent challenges may rest on dubious assumptions. U.S. pharmaceutical patent policy is poised for a major review by the U.S. Supreme Court. Later this month, the Court will hear a case, Federal Trade Commission (FTC) v. Actavis, Inc., about a tactic alleged to be illegal by U.S. regulators, so-called “reverse payment” settlements of patent litigation. A maker of a branded drug pays a “generic” drug maker offering a competing, unbranded version of a drug, to abandon its challenge of the branded firm's patent. This tactic has also received regulatory scrutiny in Europe (1, 2). The Court's ruling promises to reset the innovation/access balance for drugs, whatever the result. We explain the stakes of the case, and how settlements of “secondary” patents affect that balance.