Ruling Signals Non-Cash Deals Won’t Evade Actavis

February 23, 2016

Gregory Asciolla comments on drug pay-for-delay case settlement

According to the judge on the case, “a cash-only rule would give drug companies “carte blanche to negotiate anti-competitive settlements” structured as nonmonetary payments.

Gregory Asciolla, co-chair of Labaton Sucharow LLP’s Antitrust and Competition Litigation Practice, said he agreed that there are many unsettled questions about how to establish a large payment. There is no clear threshold for how big the payment must be, and estimating the value of a noncash settlement brings additional complications, he said.

“How do you value fees from a co-promotion?” Asciolla said. “How do you value 180 days of exclusivity when the generic finally does enter the market over any other entrants that aren’t going to get a license? There’s going to be a lot of interesting issues out there that are going to get litigated in this area.”

Although the First Circuit opinion did not resolve these questions, it did provide some clues about how lower courts in the circuit should assess allegations about the value of reverse settlements, Asciolla said. The panel stressed that Twombly did not impose a heightened fact pleading standard, meaning that pay-for-delay plaintiffs shouldn’t need to state the deal’s value “with a high degree of certainty or precision” at the pleading stage, he said.