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When the U.S. Supreme Court decided Federal Trade Commission v. Actavis Inc. last year, it opened the door to antitrust challenges to settlements between generic and branded pharmaceutical companies to resolve patent litigation under the Hatch‐Waxman Act. Although Actavis offers some guidance as to what constitutes an “illegal” reverse payment, the court largely left it to the lower courts and the FTC to sketch the contours of permissible reverse payments. As a result, interested parties can now expect a higher probability for close scrutiny of those settlements. It is important to understand the “red flags” likely to pique the interest of scrutinizing eyes.
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