Reverse Payments Settlement Analysis


Cornerstone Research works with pharmaceutical companies to address evolving antitrust issues in the context of the U.S. Supreme Court decision in FTC v. Actavis.

In FTC v. Actavis, the Supreme Court established that settlement of pharmaceutical patent litigation involving so-called “reverse payments” must be evaluated under the rule of reason and that “large, unexplained” payments may indicate anticompetitive conduct. In the antitrust disputes that our clients face now, the circuit courts are interpreting the standard set in the Actavis decision when examining “reverse payment” settlements.

Cornerstone Research staff and experts actively provide thought leadership evaluating anti- and pro-competitive rationales behind such settlements. Our experts and staff help pharmaceutical companies to address evolving antitrust issues in the context of the Actavis decision. These matters require a careful evaluation of the “but for” world, including:

  • Whether a settlement would have been possible without the alleged reverse payment
  • Whether generic competition was actually delayed
  • What the brand company’s actions would have been, in particular, vis-à-vis brand-authorized generics

These matters also require evaluation of the “reverse payment” to determine:

  • The value of any consideration provided in exchange for the payment and whether it can be considered large
  • Whether there are explanations for the payment other than delay—for example, risk aversion or litigation costs (including business disruption costs)

Finally, these matters continue to require traditional analyses, such as class certification, market definition, and damages.

  • Chicago

Rahul Guha

Chief Executive Officer

  • Boston

Sally D. Woodhouse

Senior Advisor

Daniel P. Kessler

Professor of Political Economy, Stanford Graduate School of Business;
Professor of Law, Stanford Law School;
Professor (by courtesy) of Health Research and Policy, Stanford School of Medicine;
Senior Fellow, Hoover Institution and Stanford Institute for Economic Policy Research, Stanford University;
Senior Advisor, Cornerstone Research

Sean Nicholson

Professor, Department of Economics,
Professor, Brooks School of Public Policy,
Director, Sloan Program in Health Administration,
Cornell University;
Senior Advisor, Cornerstone Research

Henry G. Grabowski

Director, Program in Pharmaceuticals and Health Economics;
Professor Emeritus;
Duke University

Iain M. Cockburn

Richard C. Shipley Professor in Management,
Questrom School of Business,
Boston University