The decision in Cephalon promises to be one of the most important rulings issued after the Supreme Court’s ruling in Not only did it send the second reverse-payment case to trial, but it also provided the most comprehensive analysis yet of the issue of “large and unjustified” payments. The court found that plaintiffs have the burden of proving a large payment as part of their showing of an anticompetitive effect under the Rule of Reason. It addressed the question of how “large” payments are to be determined, explaining that such a term refers to a payment that “exceeds saved litigation costs” and that “a reasonable jury could find . . . was significant enough to induce a generic challenger to abandon its patent claim.” Finally, the court asserted that a payment for generic services that did not exceed the fair market value still could present concern.FTC v. Actavis. The court paved the way for a trial that will address some of the central issues that have been debated. And in a thoughtful and exhaustive manner, it addressed many of the pressing issues that have raged since Actavis. In the years ahead, as courts continue to wrestle with these questions, the Cephalon ruling and trial will play a pivotal role in shaping the debate.
On January 28, 2015, Judge Mitchell Goldberg of the U.S. District Court for the Eastern District of Pennsylvania denied defendants’ summary judgment motions, sending the second reverse-payment-settlement case to trial. In King Drug Company of Florence v. Cephalon, Judge Goldberg found that plaintiffs “satisfied their burden of presenting evidence of anticompetitive effects” and that there existed a factual dispute on whether the settling parties’ justifications were “pretextual.”