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In Re Cipro: The Arkansas Carpenters Are Told Not To Come To Dinner But To Come To The Party

by Orlando Lopez

The Second Circuit recently decided a patent reverse payment case.  Reverse payments, between an original drug manufacturer and manufacturers of the generic version of the drug, involve the dropping of an infringement lawsuit by the drugmaker in exchange for the makers of generics not entering or delaying the entering into the market and receiving a portion of the profits from the drug while they are not selling their own generic.  In this type of settlement, both the original and the generic drugmakers profit.  Sounds like a good solution and nobody gets hurt (except the attorneys that did not get to participate in the lucrative patent infringement litigation).  Right?

Not so fast.  The consumer plaintiffs in this case, the health and welfare fund of unions (Arkansas Carpenters and others,) do not get the advantage of the lower cost of the drug in the generics!!  (Some drugstores are also plaintiffs).  In the Second Circuit version of In re Cipro (there is a Federal Circuit version with the same result but without an invitation to en banc), the Second Circuit panel did not want to overrule their prior precedent (Tamixofen) and so did not find that reverse pavements were unlawful, but invited the plaintiffs to apply for en banc rehearing.  The Department of Justice (DOJ), in an invited amicus brief, shifted its position to align itself  with the FTC and had called for finding reverse payments to be unlawful.  We will have to wait until the en banc hearing for the whole story.

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