Hartley LLP attorneys have pursued several cases involving reverse payments or “sham” patents in the pharmaceutical industry. The general crux of a sham patent claim is an antitrust violation arising from the conduct of branded prescription drug manufacturers to keep generic versions of their drugs off the market. When a company seeks FDA approval for its generic version of the drug, the branded company files a patent infringement case, even if there is no valid patent or the generic version does not infringe any patent. This “sham” patent litigation may be prohibited by the Sherman Act Section 2 concerning monopolies. Often the branded drug company and the generic company come to an arrangement in ostensible settlement of the patent infringement case that looks something like this: branded company pays the generic company tens of millions of dollars to not enter the market. Or they enter into a licensing agreement where the generic company does not bring the true cheaper generic drug to market. Because the alleged infringer is the one that is paid a settlement, these cases are nicknamed “reverse payment” cases. Through these and other types of arrangements the companies frustrate the very intent of the statutory scheme intended to facilitate the entry of cheaper generic drugs to market. These arrangements may give rise to a Sherman Act Section 1 conspiracy violation.

These types of cases present opportunities for municipalities, union health and welfare plans, self-insured companies and other end-payors of prescription pharmaceuticals to recover damages from their overpricing. If you or someone you know manages one of these entities and wishes to learn more about these cases, contact us.