Case: 19-60394 Document: 00515819158 Page: 1 Date Filed: 04/13/2021 United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit FILED April 13, 2021 No. 19-60394 Lyle W. Cayce Clerk Impax Laboratories, Incorporated, a corporation, Petitioner, versus Federal Trade Commission, Respondent. On Petition for Review of an Order of the Federal Trade Commission FTC Docket No. 9373 Before Southwick, Costa, and Duncan, Circuit Judges. Gregg Costa, Circuit Judge: Normally, when lawsuits settle the defendant pays the plaintiff. That makes sense as the defendant is the party accused of wrongdoing. But when a generic drug is poised to enter the market and threaten the monopoly enjoyed by a brand-name pharmaceutical, federal law can incentivize a different type of settlement. The Hatch-Waxman Act delays the entry of the generic drug if the brand-drug manufacturer files a patent infringement suit against the generic. Those patent suits are sometimes settled with the brand-drug plaintiff paying the allegedly-infringing generic. Case: 19-60394 Document: 00515819158 Page: 2 Date Filed: 04/13/2021 No. 19-60394 In return for the payment, the generic agrees to delay its market entry beyond the date when the FDA would allow it to compete. The result is an extension of the brand drug’s monopoly. Given the counterintuitive flow of money in this scenario—to, rather than from, the alleged wrongdoer—such deals are called “reverse payment settlements.” The Supreme Court has held that these settlements that extend the brand drug’s monopoly can have anticompetitive effects that violate the antitrust laws. FTC v. Actavis, 570 U.S. 136, 158 (2013). Reverse payment settlements, however, are not automatically invalid; they are subject to the rule of reason. Id. at 159. In its first post-Actavis reverse payment case, the Federal Trade Commission charged Impax Laboratories with antitrust violations for accepting payments ultimately worth more than $100 million to delay the entry of its generic drug for more than two years. The resulting administrative hearing included testimony from 37 witnesses and over 1,200 exhibits. Based on that record, the Commission conducted a rule-of-reason analysis and unanimously concluded that Impax violated antitrust law. On appeal, we face a narrower task: determining whether the Commission committed any legal errors and whether substantial evidence supported its factual findings. Concluding that the Commission’s ruling passes muster on both fronts, we DENY the petition for review. I. A. Anyone who buys pharmaceuticals knows that generic drugs are cheaper than their brand counterparts. The first generic to enter the market typically costs 10 to 25 percent less than the branded drug; those discounts grow to between 50 and 80 percent once other generics enter. 2 Case: 19-60394 Document: 00515819158 Page: 3 Date Filed: 04/13/2021 No. 19-60394 To bring competition to the drug market, the Hatch-Waxman Act promotes entry for these generics. Actavis, 570 U.S. at 142. Rather than undergoing the lengthy and costly approval process that a new drug faces, generics can file an Abbreviated New Drug Application with the Food and Drug Administration. Id. at 142; 21 U.S.C. § 355(j). If the …
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