IN THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

NOS. 15-3559, 15-3591, 15-3681 & 15-3682

In re Wellbutrin XL Antitrust Litigation

Aetna Health of California Inc. et al.,

Plaintiffs-Appellants,

v.

SmithKlineBeecham Corp. et al.,

Defendants-Appellees.

On Appeal from the United States District Court

For the Eastern District of Pennsylvania (Nos. 2-08-cv-2431, 2-08-cv-2433)

BRIEF OF FEDERAL TRADE COMMISSION AS AMICUS CURIAE

IN SUPPORT OF NO PARTY

Deborah L. Feinstein

Director

Markus H. Meier

Acting Deputy Director

Bradley S. Albert

Deputy Assistant Director

Daniel W. Butrymowicz

Elizabeth R. Hilder

Jamie R. Towey

Attorneys

Bureau of Competition

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue NW

Washington, DC 20580

David C. Shonka

Acting General Counsel

Joel Marcus

Director of Litigation

Mark S. Hegedus

Attorney

Office of the General Counsel

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue NW

Washington, DC 20580

202-326-2115

mhegedus@ftc.gov

Attorneys for Federal Trade 

Commission

Case: 15-3559 Document: 003112231252 Page: 1 Date Filed: 03/11/2016
i

TABLE OF CONTENTS

TABLE OF AUTHORITIES .................................................................................... ii

INTRODUCTION .................................................................................................... 1

INTEREST OF THE FEDERAL TRADE COMMISSION..................................... 3

STATEMENT OF THE CASE................................................................................. 4

A. Background .......................................................................................... 4

B. The Challenged Agreements................................................................ 7

C. Proceedings Below............................................................................... 9

ARGUMENT.......................................................................................................... 11

I. THE DISTRICT COURT MISUNDERSTOOD THE 

ANTICOMPETITIVE HARM SHOWING REQUIRED IN 

REVERSE-PAYMENT CASES .................................................................. 11

A. Eliminating the Risk of Competition is an Anticompetitive 

Harm Under Actavis Even if Patent Litigation Remains 

Ongoing .............................................................................................. 12

B. Proof of Actual Delayed Entry is Not Required to Show 

Anticompetitive Effects...................................................................... 16

C. The Distinction Between Anticompetitive Effect and Antitrust 

Standing is Significant for Government Antitrust Enforcement........ 19

II. A REVERSE PAYMENT IS NOT JUSTIFIED BY A 

PROCOMPETITIVE BENEFIT UNLESS THE DEFENDANT 

SHOWS HOW THE PAYMENT PROMOTES THAT BENEFIT............. 21

III. SO-CALLED “ENHANCED FTC REVIEW” PROVISIONS ARE 

IRRELEVANT TO THE ANTITRUST ANALYSIS.................................. 25

CONCLUSION....................................................................................................... 30

COMBINED CERTIFICATES

Case: 15-3559 Document: 003112231252 Page: 2 Date Filed: 03/11/2016
ii

TABLE OF AUTHORITIES

Cases

Altria Group, Inc. v. Good, 555 U.S. 70 (2008)......................................................29

Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328 (1990) ..............................18

Bd. of Trade of Chi. v. United States, 246 U.S. 231 (1918) ............................. 18, 27

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977)......................18

Cal. Dental Ass’n v. FTC, 526 U.S. 756 (1999)......................................................17

California v. Am. Stores Co., 495 U.S. 271 (1990).................................................19

Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 132 S. Ct. 1670 (2012)................4

FTC v. Actavis, 133 S. Ct. 2223 (2013).......... 1, 4, 13, 15, 16, 18, 22, 23, 24, 25, 28

FTC v. Ind. Fed’n of Dentists, 476 U.S. 447 (1986) ...............................................17

Heckler v. Chaney, 470 U.S. 821 (1985).................................................................29

In re Cipro Cases I & II, 61 Cal. 4th 116 (2015) ....................................................18

King Drug Co. of Florence, Inc. v. Cephalon, Inc., 88 F. Supp. 3d 402 

(E.D. Pa. 2015)................................................................................................4, 22

King Drug Co. of Florence, Inc. v. SmithKline Beecham Corp., 

791 F.3d 388 (3d Cir. 2015) ........................................ 4, 6, 15, 16, 19, 22, 24, 25

Moog Indus., Inc. v. FTC, 355 U.S. 411 (1958)......................................................29

Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679 (1978)........................17

United States v. Brown Univ., 5 F.3d 658 (3d Cir. 1993)........................... 17, 22, 23

United States v. Dentsply Int’l, Inc., 399 F.3d 181 (3d Cir. 2005)..........................22

Case: 15-3559 Document: 003112231252 Page: 3 Date Filed: 03/11/2016
iii

United States v. Microsoft, 253 F.3d 34 (D.C. Cir. 2001).......................................27

Volmar Distribs., Inc. v. New York Post Co., 825 F. Supp. 1153 

(S.D.N.Y. 1993)..................................................................................................18

ZF Meritor, LLC v. Eaton Corp., 696 F.3d 254 (3d Cir. 2012) ..............................19

Zoellner v. St. Luke’s Reg’l Med. Ctr., Ltd., 937 F. Supp. 2d 1261 

(D. Idaho 2013)...................................................................................................20

Statutes

15 U.S.C. § 45(a)(2).......................................................................................... 19, 21

15 U.S.C. § 45(n).....................................................................................................21

21 U.S.C. § 355 note..................................................................................................6

21 U.S.C. § 355(j)(5)(B)(iii)......................................................................................5

21 U.S.C. § 355(j)(5)(B)(iii)(I)..................................................................................5

Rules

Fed. R. App. P. 29(a) .................................................................................................4

Miscellaneous

2 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 303 

(4th ed. 2014)............................................................................................... 19, 20

12 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 2030b 

(3d ed. 2010).........................................................................................................1

Darren S. Tucker & Kevin L. Yingling, Antitrust Risk-Shifting Provisions in 

Merger Agreements After the Financial Collapse, Antitrust Source 1 (April 

2009), available at 

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1397649...........................26

Fed. Trade Comm’n, Authorized Generic Drugs: Short-Term Effects and LongTerm Impact (2011) (“AG Report”), 

http://www.ftc.gov/os/2011/08/2011genericdrugreport.pdf.................................4

Case: 15-3559 Document: 003112231252 Page: 4 Date Filed: 03/11/2016
iv

Fed. Trade Comm’n, Pay-for-Delay: How Drug Company Pay-Offs Cost 

Consumers Billions (2010), 

https://www.ftc.gov/sites/default/files/documents/reports/pay-delay-how-drugcompany-pay-offs-cost-consumers-billions-federal-trade-commission-staffstudy/100112payfordelayrpt.pdf...........................................................................4

Frequently Asked Questions About Filing Agreements with the FTC Pursuant to 

the Medicare Prescription Drug, Improvement, and Modernization 

Act of 2003, https://www.ftc.gov/system/files/attachments/competition-policyguidance/050210pharmrulesfaqsection.pdf..........................................................7

Legislative

Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 

98-417 (1984)........................................................................................................4

H.R. Rep. No. 103-617 (1994) (Conf. Rep.), as reprinted in 1994 U.S.C.C.A.N. 

1795.....................................................................................................................21

Medicare Prescription Drug, Improvement, and Modernization Act of 2003 

(“MMA”), Pub. L. No. 108-173, § 1111, 117 Stat. 2066.......................... 6, 7, 29

S. Rep. No. 107-167 (2002).......................................................................................6

Case: 15-3559 Document: 003112231252 Page: 5 Date Filed: 03/11/2016
1

INTRODUCTION

In FTC v. Actavis, the Supreme Court ruled that when the holder of a 

pharmaceutical patent pays a generic patent challenger to stay off the market, such 

a “reverse payment” must be analyzed under the traditional antitrust rule of reason.

133 S. Ct. 2223, 2237 (2013). Antitrust scrutiny is required because such payments 

to potential competitors may “maintain supracompetitive prices to be shared 

among the patentee and the challenger rather than face what might have been a 

competitive market.” Id. at 2236. The Court explained that “the relevant 

anticompetitive harm” from this type of agreement is that it “prevent[s] the risk of 

competition.” Id. Actavis thus reflects the established antitrust principle that “the 

law does not condone the purchase of protection from uncertain competition any 

more than it condones the elimination of actual competition.” 12 Phillip E. Areeda 

& Herbert Hovenkamp, Antitrust Law ¶ 2030b, at 220 (3d ed. 2010). 

The anticompetitive harm identified in Actavis can arise not just when the 

parties terminate the patent litigation, but also when the brand-name firm pays the 

generic not to enter during the pendency of the litigation. Sellers of brand-name 

prescription drugs often enjoy considerable monopoly profits until generic entry, 

and thus have an incentive to avoid such entry whenever possible. Here, 

GlaxoSmithKline (GSK), the brand-name company, allegedly paid millions of 

dollars to Teva, the generic, to stay out of the market for the antidepressant drug 

Case: 15-3559 Document: 003112231252 Page: 6 Date Filed: 03/11/2016
2

Wellbutrin XL while their patent litigation remained pending. The district court 

concluded incorrectly that the rule-of-reason principles that Actavis articulated do

not apply to this reverse-payment agreement because, unlike in Actavis, the parties 

did not settle the underlying patent litigation. While this brief takes no position on 

the ultimate merits of the case, it addresses four fundamental legal errors in the 

district court’s rule-of-reason analysis.

First, the district court erroneously concluded that the settlement challenged 

here did not “present[] the type of anticompetitive harm contemplated by Actavis” 

because, unlike that case, the underlying patent litigation continued. Op. 46.1 In 

fact, Actavis teaches that a reverse payment is likely to be anticompetitive if it 

shares monopoly profits to “prevent the risk of competition.” This concern exists

when a reverse payment induces a generic challenger to defer entering the market 

while the patent case is pending.

Second, the district court held that under the “traditional rule of reason,” the 

plaintiffs could show an antitrust violation only if they proved “that the Wellbutrin 

Settlement actually resulted in the delayed entry of Wellbutrin XL” into the 

market. Op. 52-53. But the rule-of-reason inquiry considers whether the nature of 

 1 The district court’s opinion (op.) is Document 612 on that court’s docket.

Case: 15-3559 Document: 003112231252 Page: 7 Date Filed: 03/11/2016
3

the restraint is likely to harm competition. It requires no showing of actual delayed 

entry or injury to a specific party to establish an antitrust violation.

Third, the district court erred when it credited the defendants’ proffered 

procompetitive justifications without requiring them to explain how the benefits 

are attributable to the reverse payment. Indeed, it is implausible that Teva would 

have required a payment to accept beneficial terms, or that GSK would have paid

Teva to accept such benefits.

Fourth, the district court further erred when it found the agreement lawful 

based in part on a provision that entitled the parties to abandon their deal if the 

FTC objected to it. The court mistook that provision as an effective grant of veto 

power to the FTC. More importantly, such provisions have no relevance to the 

rule-of-reason inquiry, for they shed no light on the likely competitive effects of 

the alleged restraint. 

INTEREST OF THE FEDERAL TRADE COMMISSION

The FTC, an independent federal agency charged with promoting a 

competitive marketplace and protecting consumer interests, exercises primary 

responsibility for federal antitrust enforcement in the pharmaceutical industry. The 

Commission has issued a variety of empirical studies addressing the competitive 

process by which generic substitution for brand-name drugs saves consumers 

Case: 15-3559 Document: 003112231252 Page: 8 Date Filed: 03/11/2016
4

billions of dollars each year,

2 and has used its law enforcement authority to 

challenge anticompetitive patent settlements.3 Pursuant to Fed. R. App. P. 29(a), 

the Commission respectfully submits this brief.

STATEMENT OF THE CASE

A. Background

The entry of generic drugs into the market is governed by a regulatory 

framework known as the Hatch-Waxman Amendments.4 The basic contours of that 

framework are set forth in this Court’s opinion in Lamictal, 791 F.3d at 394-96. 

Three features of the regime are particularly relevant here.

The first concerns the circumstances under which a would-be generic 

competitor can enter the market “at risk”—i.e., while patent infringement issues 

 2 See Fed. Trade Comm’n, Authorized Generic Drugs: Short-Term Effects and 

Long-Term Impact (2011) (“AG Report”), 

http://www.ftc.gov/os/2011/08/2011genericdrugreport.pdf; Fed. Trade Comm’n, 

Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions (2010), 

https://www.ftc.gov/sites/default/files/documents/reports/pay-delay-how-drugcompany-pay-offs-cost-consumers-billions-federal-trade-commission-staffstudy/100112payfordelayrpt.pdf. Both the Supreme Court and this Court have 

relied on such FTC studies. See, e.g., Caraco Pharm. Labs., Ltd. v. Novo Nordisk 

A/S, 132 S. Ct. 1670, 1678 (2012); King Drug Co. of Florence, Inc. v. SmithKline 

Beecham Corp., 791 F.3d 388, 404 n.21 (3d Cir. 2015) (“Lamictal”).

3 See, e.g., Actavis, 133 S. Ct. 2223; King Drug Co. of Florence, Inc. v. Cephalon, 

Inc., 88 F. Supp. 3d 402, 411 (E.D. Pa. 2015). 

4 Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 

98-417 (1984) (codified at various sections of Titles 15, 21, 28, and 35 of the U.S. 

Code). 

Case: 15-3559 Document: 003112231252 Page: 9 Date Filed: 03/11/2016
5

are unresolved. The Hatch-Waxman Amendments enable a generic company to 

litigate a patent challenge before it enters the market. When the generic company 

files an Abbreviated New Drug Application (ANDA) with the FDA, it may certify 

that its product does not infringe any existing, valid patent (this action is called a 

“paragraph-IV certification”). The Amendments deem the paragraph-IV 

certification to be an artificial act of infringement and allow the brand-name 

manufacturer to promptly sue the generic applicant. A timely suit automatically

stays FDA approval of the ANDA for 30 months. 21 U.S.C. § 355(j)(5)(B)(iii).

The stay immediately terminates, however, if a court rules that the patent at issue is 

invalid or not infringed. 21 U.S.C. § 355(j)(5)(B)(iii)(I). Once the stay terminates

and the FDA approves the ANDA, the generic can enter the market (unless the 

patentee obtains a preliminary injunction).

The Hatch-Waxman Amendments thus permit a generic competitor to enter 

the market at risk. A company that chooses to enter at risk and is later held to have 

infringed the patent may be liable for substantial damages. The decision to enter at 

risk therefore reflects in part the generic drug applicant’s estimation of the strength 

of its patent-infringement defense. By the time of the settlement in this case, Teva

had already launched one version of the product at issue at risk.

Second, under the Hatch-Waxman Amendments, the first generic to file an 

ANDA with a paragraph-IV certification is eligible for a 180-day exclusivity 

Case: 15-3559 Document: 003112231252 Page: 10 Date Filed: 03/11/2016
6

period in which it can sell its product without competition from other generic 

firms. See Lamictal, 791 F.3d at 396. But the brand-name manufacturer is still 

allowed during this period to sell its own “authorized generic,” which is the brandname drug marketed as a generic. Id. This Court recently held that a commitment 

by the brand-name manufacturer not to introduce its own authorized generic to 

compete against the generic manufacturer—referred to as a “no-AG agreement”—

can amount to a reverse payment that “may be subject to antitrust scrutiny under 

the rule of reason.” Id. at 403.

Third, parties to settlements of pharmaceutical patent litigation under the 

Hatch-Waxman Amendments must submit their settlement agreements to the FTC

and the Department of Justice. Congress imposed that requirement because it was 

concerned about “abuse of the Hatch-Waxman law” resulting from “pacts between 

big pharmaceutical firms and makers of generic versions of brand name drugs, that 

are intended to keep lower-cost drugs off the market.” S. Rep. No. 107-167, at 4 

(2002). See Medicare Prescription Drug, Improvement, and Modernization Act of 

2003 (“MMA”), Pub. L. No. 108-173, §§ 1111-1118, 117 Stat. 2066, 2461-64

(codified at 21 U.S.C. § 355 note). The MMA facilitates law enforcement by 

providing access to all reverse-payment deals. But Congress placed no duty on the 

FTC or the DoJ to take action on a submitted settlement. To the contrary, the 

MMA provides that “any failure ... to take action” concerning a filed agreement 

Case: 15-3559 Document: 003112231252 Page: 11 Date Filed: 03/11/2016
7

“shall not at any time bar any proceeding or any action with respect to” any such 

agreement. Id. at § 1117, 117 Stat. 2463.

The Commission reviews agreements filed pursuant to the MMA.

5 Staff 

sometimes takes further action, ranging from informal inquiries into settlement 

terms to formal investigations that may result in an enforcement action. As with 

enforcement matters generally, these decisions are made on a case-by-case basis.

Importantly, a determination not to investigate or challenge an agreement does not 

signify an implicit approval of the agreement or a lack of antitrust concern.

B. The Challenged Agreements

GSK manufactures the brand-name drug Wellbutrin XL, an extended-release 

version of the antidepressant bupropion hydrochloride. GSK’s business partner, 

Biovail, owns rights to patents covering Wellbutrin XL. Op. 10. In September 

2004, Anchen Pharmaceuticals, Inc. filed the first ANDA with a paragraph-IV 

certification for a generic version of Wellbutrin XL. Op. 12. Anchen was therefore

eligible for a 180-day period during which other ANDA filers (but not an 

authorized generic) would be precluded from competing. GSK and Biovail sued 

 5 See generally Frequently Asked Questions About Filing Agreements with the 

FTC Pursuant to the Medicare Prescription Drug, Improvement, and 

Modernization Act of 2003, 

https://www.ftc.gov/system/files/attachments/competition-policyguidance/050210pharmrulesfaqsection.pdf (last visited Mar. 10, 2016).

Case: 15-3559 Document: 003112231252 Page: 12 Date Filed: 03/11/2016
8

Anchen for patent infringement in December 2004, triggering the automatic 30-

month stay on FDA approval of Anchen’s ANDA. Id.

In August 2006, the district court hearing the patent case entered a final 

judgment that Anchen’s generic product did not infringe Biovail’s patent. Op. 15. 

Biovail appealed the decision to the Federal Circuit. Op. 15-16.6 In the meantime, 

the district court’s holding of non-infringement terminated the stay on FDA 

approval of Anchen’s ANDA, which FDA approved in December 2006. Op. 20. 

Pursuant to an agreement with Anchen, Teva immediately began selling 

300-mg generic Wellbutrin XL. Op. 19-20 & n.10. This launch was “at risk” 

because Biovail still had pending claims of patent infringement. Op. 25-27. 

Anchen and Teva also anticipated launching a 150-mg version at risk as early as 

the first quarter of 2007. Op. 20. 

In February 2007, however, Teva and Anchen abandoned their plan to 

launch 150-mg generic Wellbutrin XL at risk. Instead, they entered into the 

agreements with GSK and Biovail that are the subject of this appeal. Under those 

agreements, Teva and Anchen committed not to sell 150-mg generic Wellbutrin 

XL for more than a year—until a licensed entry date of May 30, 2008—unless 

Anchen won the patent appeal before then. Op. 26. GSK agreed not to market an 

 6 By the time of the appeal, GSK had withdrawn from the patent suit. Op. 12.

Case: 15-3559 Document: 003112231252 Page: 13 Date Filed: 03/11/2016
9

authorized generic during the first 180 days after Teva began to sell either 150-mg 

or 300-mg generic Wellbutrin XL. Op. 27. Finally, the parties agreed that, if the 

FTC objected within a defined time period, they would “either resolve the 

objection or have the right to terminate the entire settlement.” Op. 66.

C. Proceedings Below

Direct and indirect purchaser plaintiffs sued Biovail and GSK for conspiring

to prevent generic competition, including by entering into anticompetitive reversepayment agreements with generic drug manufacturers. Op. 34-35. The district 

court granted summary judgment in favor of the defendants, holding that no 

reasonable jury could find the challenged reverse-payment agreement unlawful.

The court acknowledged GSK’s no-AG commitment, found that Teva had insisted 

on this provision, and did not question that it was worth hundreds of millions of 

dollars to Teva. Op. 27, 46 n.28, 54, 63. But notwithstanding Teva’s agreement to 

stay out of the market, the court interpreted Actavis to have adopted a “limited 

definition” of the competitive harm that justifies antitrust scrutiny of reverse 

payments. It concluded that Actavis did not apply to this reverse-payment 

settlement because the patent challenge continued, so the settlement “maintain[ed] 

the risk of a finding of patent invalidity or non-infringement.” Op. 41-42. The 

court reasoned that, because the settlement allowed the patent litigation to 

continue, it was distinguishable from the settlement reviewed in Actavis and was 

Case: 15-3559 Document: 003112231252 Page: 14 Date Filed: 03/11/2016
10

comparable to one without a reverse payment at all. Op. 42-43. In the court’s view, 

continued litigation meant that “the patent’s strength dictated the entry date for 

generic Wellbutrin XL,” op. 43, notwithstanding Teva’s insistence on a payment. 

After finding that Actavis did not apply, the court then assessed the 

agreement under what it called the “traditional rule of reason.” See, e.g., op. 44-48, 

50 n.32, 52. According to the court, this required plaintiffs to “show that the 

Wellbutrin Settlement actually resulted in the delayed entry of Wellbutrin XL—

that absent the Wellbutrin Settlement, generic competition would have occurred 

earlier.” Op. 52-53. Ruling that the plaintiffs had failed to provide such evidence, 

the court held that no reasonable jury could find the challenged reverse-payment 

agreement to be anticompetitive. Op. 44, 54-56. 

The court also held that, even if the plaintiffs could show anticompetitive 

effects, “a reasonable jury could not find that any anticompetitive effects outweigh 

the procompetitive benefits of the settlement.” Op. 5; see also op. 57-58. The court 

deemed as procompetitive certain benefits that GSK had granted to Teva and 

Anchen that could facilitate generic entry. Op. 57-62. Having credited GSK’s 

testimony that Teva would not have settled without the no-AG commitment, the 

court held this challenged reverse payment was necessary to achieve these

proffered procompetitive benefits. Op. 63. It did not, however, explain why Teva 

would insist on being paid before it would accept help entering the market.

Case: 15-3559 Document: 003112231252 Page: 15 Date Filed: 03/11/2016
11

Finally, the court also deemed settlement provisions relating to FTC review 

of the agreements to be relevant to its rule-of-reason analysis. Op. 64-67. The court 

explained that the parties could terminate the settlement if the FTC objected to it

and, after good-faith efforts, they were unable to address the agency’s concern. Op. 

66. In the court’s view, this reservation of a right to terminate “in effect” gave the 

FTC “veto power over the Wellbutrin Settlement.” Op. 66. As a result, the court 

suggested, the FTC review provisions had procompetitive benefits “at least in an 

indirect way,” because “the FTC, therefore, did not have to use their limited 

resources to file a lawsuit to force changes to the agreement or even abrogation of 

it.” Id.; see also id. n.40. In addition, the court ruled, these “enhanced FTC review” 

provisions “tend to negate any anticompetitive aim of the parties, in particular 

GSK.” Op. 66. 

ARGUMENT

I. THE DISTRICT COURT MISUNDERSTOOD THE ANTICOMPETITIVE HARM 

SHOWING REQUIRED IN REVERSE-PAYMENT CASES

The district court’s holding that no reasonable jury could find that the 

Wellbutrin settlement agreement had any anticompetitive effect rests on two legal 

errors. First, the court’s conclusion that Actavis does not apply to a reverse 

payment that does not terminate the underlying patent litigation turns on an 

untenably narrow view of the competitive concern identified by the Supreme 

Court. Actavis reflects antitrust law’s fundamental concern with collusive 

Case: 15-3559 Document: 003112231252 Page: 16 Date Filed: 03/11/2016
12

arrangements by potential rivals that agree to avoid competition and share the 

resulting monopoly profits. This core antitrust concern can arise whenever a 

pharmaceutical company pays a potential generic rival to stay out of the market, 

whether or not patent litigation is still pending. 

Second, the district court erroneously held that plaintiffs could establish an 

antitrust violation under a traditional rule-of-reason analysis only if they “show[ed]

that the Wellbutrin Settlement actually resulted in the delayed entry.” Op. 52-53. In 

fact, the traditional rule of reason requires a plaintiff to show conduct that threatens 

harm to the competitive process and sufficient market power to inflict such harm; it 

does not require proof of the “but-for” world—what the market would have looked 

like in the absence of the anticompetitive conduct. In holding to the contrary, the 

district court improperly conflated the analysis of an antitrust violation with the 

distinct question of antitrust standing. A private plaintiff seeking damages must

show that it suffered an injury-in-fact caused by the violation. The government 

faces no such requirement. Obscuring that distinction threatens to impede 

government law-enforcement actions.

A. Eliminating the Risk of Competition is an Anticompetitive Harm

Under Actavis Even if Patent Litigation Remains Ongoing

In Actavis, the Supreme Court examined a patent litigation settlement 

between a brand-name drug manufacturer and a would-be generic entrant. The 

Court found the settlement “unusual” because “a party with no claim for damages 

Case: 15-3559 Document: 003112231252 Page: 17 Date Filed: 03/11/2016
13

... walks away with money simply so it will stay away from the patentee’s 

market.” Actavis, 133 S. Ct. at 2231, 2233. Such “reverse payments,” the Court 

held, “tend to have significant adverse effects on competition,” id. at 2231, because 

they “maintain supracompetitive prices to be shared among the patentee and the 

challenger rather than face what might have been a competitive market.” Id. at 

2236. In other words, reverse-payment settlements “prevent the risk of 

competition.” Id. 

The core concern in Actavis was that a monopolist and a potential 

competitor would collude to avoid competing for some period of time and share 

the resulting monopoly profits. See id. at 2235. The Court thus focused on the 

companies’ reasons for making the reverse payment: “If the basic reason is a desire 

to maintain and to share patent-generated monopoly profits, then, in the absence of 

some other justification, the antitrust laws are likely to forbid the arrangement.” Id.

at 2237.

The decision below emphasized repeatedly that Teva had insisted on a noAG agreement as part of any settlement. Op. 27-28, 54-55. The court further noted 

this Court’s recent holding that “a no authorized generic agreement ‘falls under 

Actavis’s rule because it may well represent an unusual, unexplained reverse 

transfer of considerable value from the patentee to the alleged infringer and may 

therefore give rise to the inference that it is a payment to eliminate the risk of 

Case: 15-3559 Document: 003112231252 Page: 18 Date Filed: 03/11/2016
14

competition.’” Op. 37 n.25 (quoting Lamictal, 791 F.3d at 393). Indeed, the court 

did not question plaintiffs’ allegation that GSK’s no-AG agreement amounted to a 

$200 million payment to Teva; it simply deemed that fact irrelevant. Op. 46 n.28.

Finally, the court observed that “a reasonable jury [could] find that Anchen/Teva 

would have launched at risk after June 2007,” op. 84, and that they agreed in the 

settlement to delay competition until Anchen prevailed in the Federal Circuit, or 

May 30, 2008, whichever occurred first.

The court nevertheless held that the settlement “d[id] not present the same 

antitrust concerns that motivated the court in Actavis” because it “required the 

underlying patent litigation to continue, maintaining the risk of a finding of patent 

invalidity or non-infringement and providing for immediate generic entry upon 

such a finding.” Op. 41; see also op. 46-47. The court therefore did not examine 

the purpose of GSK’s no-AG commitment to Teva or consider whether that 

payment induced Teva to agree not to launch at risk, thereby maintaining GSK’s 

otherwise uncertain 150-mg Wellbutrin XL monopoly profits while the patent case

remained pending.

In reaching that conclusion, the district court ignored the reasoning of 

Actavis. To be sure, the Supreme Court in Actavis found that a reverse payment 

can be anticompetitive if it settles a patent challenge and thereby eliminates the 

risk that the underlying patent will be held invalid or not infringed. But the Court 

Case: 15-3559 Document: 003112231252 Page: 19 Date Filed: 03/11/2016
15

never suggested that the risk of losing the patent case was the only cognizable risk 

of competition a reverse payment might seek to avoid. Rather, the reasoning of 

Actavis extends to any situation where a monopolist makes a reverse payment to 

“maintain supracompetitive prices to be shared among the patentee and the 

challenger rather than face what might have been a competitive market.” Actavis, 

133 S. Ct. at 2236. An agreement that forecloses the possibility of at-risk entry into 

the market (in exchange for shared monopoly profits) can also be anticompetitive 

under that analysis.

In overlooking the underlying logic of Actavis, the district court elevated

nominal factual distinctions over economic reality. In Lamictal, this Court reversed 

the district court for the same analytical error. There, relying on multiple 

references in Actavis to “money,” the district court concluded that Actavis was 

limited to payments of cash and did not address equally valuable non-cash 

compensation. This Court held instead that as a matter of economic reality “no-AG 

agreements are likely to present the same types of problems as reverse payments of 

cash.” Lamictal, 791 F.3d at 404. This Court further explained that it did not 

believe the Actavis court “intended to draw such a formal line,” citing the wellestablished proposition that “economic realities rather than a formalistic approach 

must govern review of antitrust activity.” Id. at 406 & n.24 (quoting United States 

v. Dentsply Int’l, 399 F.3d 181, 189 (3d Cir. 2005)).

Case: 15-3559 Document: 003112231252 Page: 20 Date Filed: 03/11/2016
16

The alleged reverse payment in this case is “likely to present the same types 

of problems” (Lamictal, 791 F.3d at 404) as the payment analyzed in Actavis. GSK 

allegedly gave Teva something of great value—a six-month monopoly on generic 

sales of Wellbutrin XL worth millions of dollars—at significant cost to itself. In 

the same agreement, Teva, which could have entered the market at any time, 

agreed to stay out pending the patent appeal, thus safeguarding GSK’s profits. This 

raises the prospect that the payment may have been designed “to maintain and to 

share patent-generated monopoly profits.” Actavis, 133 S. Ct. at 2237.

B. Proof of Actual Delayed Entry is Not Required to Show 

Anticompetitive Effects

The district court held that “[i]t is in keeping with the traditional rule of 

reason analysis to require the plaintiffs to show that the Wellbutrin Settlement 

actually resulted in the delayed entry of Wellbutrin XL—that absent the Wellbutrin 

Settlement, generic competition would have occurred earlier.” Op. at 52-53.7 It 

then ruled that plaintiffs had failed to produce evidence supporting either of two 

potential but-for scenarios—that the parties would have agreed to an earlier entry 

date or that continued litigation would have resulted in earlier entry because Teva 

 7 The district court appears to suggest that the Actavis analysis is somehow 

different from the traditional rule of reason. But in Actavis, the Supreme Court 

made clear that the “FTC must prove its case as in other rule-of-reason cases.” 133 

S. Ct at 2237. Thus, Actavis does not redefine the general antitrust rule of reason, 

but simply applies it. Lamictal, 791 F.3d at 411.

Case: 15-3559 Document: 003112231252 Page: 21 Date Filed: 03/11/2016
17

would have launched at risk. Op. 56. The district court erred in holding that a 

plaintiff can show an antitrust violation under the rule-of-reason analysis only if it 

shows what actually would have occurred in the market absent the anticompetitive 

conduct.

To prevail under the rule of reason, an antitrust plaintiff must demonstrate 

that a challenged agreement has anticompetitive effects. The Supreme Court has 

long recognized that proving anticompetitive effects does not require 

reconstructing the hypothetical world absent the conduct. Instead, the analysis 

focuses on whether an agreement “promotes competition or ... suppresses 

competition.” Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679, 691 

(1978).

Of course, anticompetitive effects can be established by demonstrating an 

actual increase in prices or decrease in output. See, e.g., United States v. Brown 

Univ., 5 F.3d 658, 668 (3d Cir. 1993). But the Supreme Court has condemned 

practices that “impede the ordinary give and take of the market place,” Prof’l 

Eng’rs, 435 U.S. at 692, or were “likely enough to disrupt the proper functioning 

of the price-setting mechanism of the market ... even absent proof that [they] 

resulted in higher prices.” FTC v. Ind. Fed’n of Dentists, 476 U.S. 447, 461-62 

(1986). The Court has focused on “the principal tendency of a restriction” to 

interfere with competition. Cal. Dental Ass’n v. FTC, 526 U.S. 756, 781 (1999); 

Case: 15-3559 Document: 003112231252 Page: 22 Date Filed: 03/11/2016
18

see also Bd. of Trade of Chi. v. United States, 246 U.S. 231, 238 (1918) (courts 

should examine “the nature of the restraint and its effect, actual or probable”).

Similarly, in a reverse-payment case, anticompetitive effects are established if the 

payment represents a sharing of the brand’s monopoly profits to “prevent the risk 

of competition”—whether or not that competition would have ultimately 

materialized. Actavis, 133 S. Ct. at 2236; see also In re Cipro Cases I & II, 61 Cal. 

4th 116, 150 (2015) (applying parallel state-law provision).

Additional proof is required for a private plaintiff to demonstrate it has 

antitrust standing to sue under the Clayton Act. To be entitled to damages, a 

private plaintiff must prove not only an antitrust violation, but also that the

violation caused actual antitrust injury. See Brunswick Corp. v. Pueblo Bowl-OMat, Inc., 429 U.S. 477, 485-86, 489 (1977). But this inquiry is analytically

separate from—and additional to—the showing of harm to competition necessary 

to establish the underlying antitrust violation.8 See id. at 486, 489 (explaining 

injury requirement and noting that antitrust laws include “statutory prohibition[s] 

against acts that have a potential to cause certain harms” and statutory authority for 

 8 Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 344 (1990) (quoting 

Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 334.2c, at 330 (1989 

Supp.)); see also Volmar Distribs., Inc. v. New York Post Co., 825 F. Supp. 1153, 

1161 n.5 (S.D.N.Y. 1993) (under Atlantic Richfield, antitrust injury requirement is 

separate from substantive requirements of Sherman Act).

Case: 15-3559 Document: 003112231252 Page: 23 Date Filed: 03/11/2016
19

“damages action[s] intended to remedy those harms”); Lamictal, 791 F.3d at 410 

n.35 (treating question of antitrust injury as distinct from violation); ZF Meritor, 

LLC v. Eaton Corp., 696 F.3d 254, 281, 289 (3d Cir. 2012) (same).

The district court’s opinion reflects its failure to keep these two analyses 

separate. It twice examines whether generic Wellbutrin XL would have actually 

launched in the absence of the settlement agreement: first to determine whether 

there was an antitrust violation, op. 52-56, and then again to determine whether the 

plaintiffs satisfied the antitrust standing requirement, op. 78-84. 

C. The Distinction Between Anticompetitive Effect and Antitrust 

Standing is Significant for Government Antitrust Enforcement

In a private damages case, the distinction between antitrust violation and 

antitrust standing is often academic because private plaintiffs must prove both. The 

district court’s failure to recognize this distinction, however, implicates 

government antitrust enforcement. Because the FTC, along with the DoJ, enforces 

the substantive antitrust laws directly, it need not show a specific injury. See 15 

U.S.C. § 45(a)(2); California v. Am. Stores Co., 495 U.S. 271, 295-96 (1990) (“In 

a Government case the proof of the violation of law may itself establish sufficient 

public injury to warrant relief.”); 2 Phillip E. Areeda & Herbert Hovenkamp, 

Antitrust Law ¶ 303, at 61 (4th ed. 2014). The government can “sue anyone who 

violates the antitrust laws” and obtain an injunction to block an anticompetitive 

agreement or conduct. Zoellner v. St. Luke’s Reg’l Med. Ctr., Ltd., 937 F. Supp. 2d 

Case: 15-3559 Document: 003112231252 Page: 24 Date Filed: 03/11/2016
20

1261, 1266 (D. Idaho 2013) (citing Glen Holly Entm’t, Inc. v. Tektronix, Inc., 352 

F.3d 367, 371 (9th Cir. 2003)).

The distinction between public and private suits is intentional, reflecting the 

strong public law enforcement interest in allowing the government to redress 

conduct when “the reasonably anticipated consequence[]” is a “statutorily 

prohibited injury.” 2 Areeda & Hovenkamp, Antitrust Law ¶ 303, at 61. The 

leading antitrust treatise offers a useful analogy:

[T]he state can interdict drunken driving even when the driver has 

caused no injury at all in the particular case. Its power results from the 

fact that drunken driving is known to have harmful consequences and 

it is less socially costly to arrest the driver before rather than after 

these consequences occur. The private plaintiff’s interest, by contrast, 

is purely remedial.

Id. at 61-62. 

The district court appeared to recognize that the FTC faces a lower burden in 

a reverse-payment case than private plaintiffs, but it incorrectly characterized the 

nature and source of the distinction. Op. 72 (the FTC “faces a different standard of 

causation in bringing agency antitrust actions such as Actavis: the FTC must 

establish only that the defendant’s action is ‘likely to cause injury’”) (quoting 15 

U.S.C. § 45(n)). First, the district court’s reference in the decision’s antitrust 

standing section to the “standard of causation” facing the FTC suggests that the 

FTC must show antitrust standing. But that is not correct because, as just shown, 

Case: 15-3559 Document: 003112231252 Page: 25 Date Filed: 03/11/2016
21

the FTC enforces the antitrust laws directly pursuant to the FTC Act. See 15 U.S.C. 

§ 45(a)(2).

Second, the district court erroneously distinguished government and private 

plaintiffs on the basis of Section 5(n) of the FTC Act, 15 U.S.C. § 45(n). Op. 72. 

That section, however, governs only the Commission’s authority over “unfair ... 

acts or practices,” not its distinct authority to stop “unfair methods of competition.”

See H.R. Rep. No. 103-617 at 12 (1994) (Conf. Rep.), as reprinted in 1994 

U.S.C.C.A.N. 1795, 1798 (noting that 15 U.S.C. § 45(n) codifies the 

Commission’s Policy Statement on Unfairness (appended to Int’l Harvester Co., 

104 F.T.C. 949, 1070, 1072 (1984)), which specifically does not apply to “unfair 

methods of competition”). Accordingly, Section 5(n) is irrelevant to an FTC case 

brought under Actavis, which alleges only “unfair methods of competition.”

II. A REVERSE PAYMENT IS NOT JUSTIFIED BY A PROCOMPETITIVE BENEFIT

UNLESS THE DEFENDANT SHOWS HOW THE PAYMENT PROMOTES THAT

BENEFIT

The district court held that even if plaintiffs could show anticompetitive 

effects, the reverse-payment agreement could not violate antitrust law because it 

had sufficient procompetitive justifications. Op. 62-63. This mistaken conclusion 

rests on a misunderstanding of the justification inquiry prescribed by the rule of 

reason. 

Case: 15-3559 Document: 003112231252 Page: 26 Date Filed: 03/11/2016
22

Under the rule of reason, once a plaintiff shows evidence of anticompetitive 

effect and market power, “the burden shifts to the defendant to show that the 

challenged conduct promotes a sufficiently pro-competitive objective.” See Brown 

Univ., 5 F.3d at 669. In the reverse-payment context, this means that the defendant 

must “explain[] the presence of the challenged term and show[] the lawfulness of 

that term under the rule of reason.” Lamictal, 791 F.3d at 412 (quoting Actavis,

133 S. Ct. at 2236); see also Cephalon, Inc., 88 F. Supp. 3d at 415. The proffered 

justification cannot be pretextual. See United States v. Dentsply Int’l, Inc., 399 

F.3d 181, 197 (3d Cir. 2005); see also Cephalon, Inc., 88 F. Supp. 3d at 418-19.

In Actavis, the Supreme Court specifically identified two justifications for 

reverse payments—“litigation expenses saved through the settlement” and 

“compensation for other services that the generic has promised to perform.” 133 S. 

Ct. at 2236. Such explanations can indicate that the generic’s decision not to 

compete was based on “traditional settlement considerations,” thereby refuting the 

antitrust concern that the parties are sharing monopoly profits preserved by 

avoiding competition. Id. at 2236. 

The Court observed that “[t]here may be other justifications” than the two 

specifically identified. Id. But nothing in Actavis suggests that it altered traditional 

rule-of-reason principles governing the assessment of justifications or that a 

justification can be credited if it lacks any connection to the reverse payment. 

Case: 15-3559 Document: 003112231252 Page: 27 Date Filed: 03/11/2016
23

Indeed, absent an explanation for the reverse payment, nothing contradicts the 

conclusion that “the payment’s objective is to maintain supracompetitive prices to 

be shared among the patentee and the challenger rather than face what might have 

been a competitive market—the very anticompetitive consequence that underlies 

the claim of antitrust unlawfulness.” Id.

The district court’s justification analysis is thus flawed for several reasons.

First, the district court failed to require the defendant to articulate a plausible link 

between the reverse payment (a no-AG commitment that the court acknowledged 

could have significant value) and a sufficiently procompetitive objective. The court 

relied on a number of provisions in the settlement that might assist Teva’s getting 

the generic product to market. Op. 57-58. But the antitrust question is not whether 

there are benefits to certain provisions in the abstract. It is whether the benefits are 

attributable to the restraint—in this case the payment. See Brown Univ., 5 F.3d at 

669 (restraint must “promote[] a sufficiently pro-competitive objective”). None of 

the purported procompetitive benefits the district court identified can explain the 

payment as anything other than an inducement to Teva to share GSK’s monopoly 

profits instead of competing prior to May 2008. Indeed, it defies economic logic 

and common sense that Teva would insist on a payment to accept terms that 

unambiguously benefited it by facilitating its generic entry, or that GSK would 

otherwise pay to accelerate such entry.

Case: 15-3559 Document: 003112231252 Page: 28 Date Filed: 03/11/2016
24

Second, the district court erred by finding the agreement justified because it 

allowed generic entry earlier than otherwise might have been possible. Actavis 

specifically rejected this line of argument. See 133 S. Ct. at 2234-35. As this Court 

explained, “[n]otwithstanding such ‘early entry,’ the antitrust problem was that ... 

entry might have been earlier, and/or the risk of competition not eliminated, had 

the reverse payment not been tendered.” Lamictal, 791 F.3d at 408. Indeed, the 

“concern with combining an early-entry date with the valuable consideration of a 

no-AG agreement is that the generic manufacturer may be willing to accept a later 

early-entry date without any corresponding benefit to consumers.” Id. at 405 n.23; 

see also Actavis, 133 S. Ct. at 2237 (“They may, as in other industries, settle in 

other ways, for example, by allowing the generic manufacturer to enter the 

patentee’s market prior to the patent’s expiration, without the patentee paying the 

challenger to stay out prior to that point.”). 

Finally, the district court’s analysis irrationally turns proof of the plaintiff’s 

case—the use of a reverse payment to induce an entry-restricting settlement—into 

a defense. The district court found that Teva would not have entered the settlement 

unless GSK shared its monopoly profits through a no-AG commitment. Op. 67. 

Based on this factual finding, the court concluded that the payment was necessary 

to achieve the purported procompetitive benefits of the agreement. Id. Under 

Actavis, however, that is the very finding that can demonstrate that the parties 

Case: 15-3559 Document: 003112231252 Page: 29 Date Filed: 03/11/2016
25

intended the reverse payment to eliminate the risk of competition by 

“maintain[ing] and ... shar[ing] patent-generated monopoly profits.” Actavis, 133 

S. Ct. at 2237; see also Lamictal, 791 F.3d at 410 (GSK’s “agreement not to launch 

an authorized generic was an inducement—valuable to both it and Teva—to ensure 

a longer period of supracompetitive monopoly profits ...”). Absent the payment, 

consumers may have benefited from an at-risk launch by Teva. By the district 

court’s flawed logic, the payment was justified by the very thing the Supreme 

Court found to be anticompetitive.

None of the justifications discussed by the district court explains the alleged 

no-AG payment as anything other than an inducement to the generic to eliminate 

the risk of competition prior to an appellate court decision on the patent merits. 

The court’s ruling that these aspects of the settlement could justify any 

anticompetitive effects of the challenged restraint was legal error.

III. SO-CALLED “ENHANCED FTC REVIEW” PROVISIONS ARE IRRELEVANT TO 

THE ANTITRUST ANALYSIS

As explained above, the MMA requires drug companies to file their patent 

settlements and certain other agreements with the FTC and the DoJ. The district 

court deemed it relevant to a rule-of-reason analysis of a reverse-payment 

agreement that the Wellbutrin settlement agreement included provisions relating to 

that statutorily mandated submission that (1) the parties would respond to FTC 

inquiries and attempt to resolve any FTC objection, and (2) any party could 

Case: 15-3559 Document: 003112231252 Page: 30 Date Filed: 03/11/2016
26

terminate the settlement if they could not address any FTC objection. Op. 64-65. 

The court misconstrued these provisions to mean that “[t]he FTC was given, in 

effect, veto power over the Wellbutrin Settlement,” and held that these provisions 

“tend to negate any anticompetitive aim of the parties, in particular GSK,” and 

“may also be described as procompetitive, at least in an indirect way.” Op. 66.9

But, as stated by the district court: “If the FTC objected to the settlement, the 

parties agreed that they would either resolve the objection or have the right to

terminate the entire settlement.” Op. 66. See also op. 32 (GSK had similar rights). 

From this unremarkable provision granting the parties the right to terminate the 

settlement, the court concluded that the FTC had “veto power” over it.10 Op. 66-67 

(“the FTC only had to raise concerns to have the agreement changed in a way that 

 9 The district court asked the parties, in preparation for argument on the summary 

judgment issues concerning the challenged agreements, to provide additional 

information on the procedures applicable to agency review of those agreements. 

Order, In re Wellbutrin XL Antitrust Litig., 2:08-cv-02431 (E.D. Pa. July 17, 2012), 

ECF No. 464. The FTC submitted an amicus brief in the district court in 

September 2013, in part to explain the agency’s review of drug patent settlements 

under the MMA. See Federal Trade Commission’s Brief as Amicus Curiae at 19-

21, In re Wellbutrin XL Antitrust Litig., No. 2:08-cv-02431, (E.D. Pa. Sept. 26, 

2013), ECF No. 510-2. The court rejected the FTC’s submission. Order, In re 

Wellbutrin XL Antitrust Litig., No. 2:08-cv-02431, (E.D. Pa. Oct. 3, 2013), ECF 

No. 522.

10 So-called “best efforts” and “termination rights” clauses are common in merger 

agreements that the parties believe may raise competitive concerns. See, e.g., 

Darren S. Tucker & Kevin L. Yingling, Antitrust Risk-Shifting Provisions in 

Merger Agreements After the Financial Collapse, Antitrust Source 1, 3 (April 

2009), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1397649.

Case: 15-3559 Document: 003112231252 Page: 31 Date Filed: 03/11/2016
27

would be more beneficial to consumers.”); op. 65 (“A note of concern from the 

agency was sufficient to alter or terminate the settlement; no formal agency action 

was necessary.”).11 The reservation of a right to terminate a filed settlement does 

not mean that it will in fact be terminated if the agency objects. 

More fundamentally, the district court’s reliance on FTC-related provisions 

reflects a basic misunderstanding of antitrust principles in three respects. 

First, the district court asserted that what it called the “provisions for 

enhanced FTC review” would “tend to negate any anticompetitive aim of the 

parties, in particular GSK.” It is well established, however, that “a good intention 

will [not] save an otherwise objectionable” arrangement. Chi. Bd. of Trade, 246 

U.S. at 238. A party’s subjective intent is relevant only to the extent that it helps 

the court understand the likely effect of the challenged conduct. See, e.g., id.

(intent evidence may help to “interpret facts and to predict consequences”).12 In the 

context of reverse payments in particular, Actavis explains that “the relevant 

antitrust question” is how to explain the presence of the payment. 133 S. Ct. at 

 11 Agreements filed with the FTC under the MMA are subject to confidentiality 

protections that limit the agency’s ability to disclose the contents of such 

agreements. This Court, however, will be able to examine the relevant provisions 

(Section 3 of the Omnibus Agreement) in the sealed portion of the joint appendix.

12 See also United States v. Microsoft, 253 F.3d 34, 59 (D.C. Cir. 2001)

(knowledge of intent behind challenged conduct “is relevant only to the extent it 

helps us understand the likely effect of the monopolist’s conduct”).

Case: 15-3559 Document: 003112231252 Page: 32 Date Filed: 03/11/2016
28

2237. Is the basic reason “to maintain and to share ... monopoly profits?” Id. Or 

can the defendants show “legitimate justifications” that can “explain[] the presence 

of the challenged [reverse-payment] term?” Id. at 2236. This inquiry focuses on the 

competitive effects of the conduct. Provisions in a settlement agreement promising 

cooperation with an FTC review reveal nothing about the likely competitive effects 

of the challenged agreement.

Second, the district court’s suggestion that the FTC-related provisions 

provided “indirect procompetitive benefits” likewise is unconnected to the likely 

effects of the challenged reverse payment. The court reasoned that the veto power 

the parties purportedly granted the FTC would conserve FTC law enforcement 

resources. Op. 66. But even if that were correct, as a matter of antitrust law, the 

potential savings in FTC law enforcement resources cannot possibly offset adverse 

economic effects on consumers of Wellbutrin XL.

Moreover, the district court’s reasoning implicitly assumes that the FTC’s 

decision not to challenge the Wellbutrin settlement amounted to an administrative 

blessing of the deal.

13 But it is well established that government inaction does not 

 13 According to the court, merely “a note of concern” from the FTC “was sufficient 

to alter or terminate the settlement,” and the FTC raised no concern. Op. 65. The 

court thus went beyond its mistaken view of FTC-related provisions, adopting as 

material facts the settling parties’ description of what occurred at an FTC meeting 

and the identity of agency personnel with whom they interacted. Op. 32-34, 65.

Case: 15-3559 Document: 003112231252 Page: 33 Date Filed: 03/11/2016
29

indicate agency approval. See, e.g., Altria Group, Inc. v. Good, 555 U.S. 70, 89-90 

(2008). That is particularly true here, where the MMA makes clear that “any 

failure of the [FTC] to take action” against a filed settlement agreement “shall not 

at any time bar any proceeding or any action with respect to” any such agreement.

MMA § 1117, 117 Stat. at 2463.

Courts impute no legal significance to agency inaction for good reason. An 

agency’s exercise of its enforcement discretion “involves a complicated balancing” 

of factors, including “whether a violation has occurred,” whether the agency has 

available enforcement resources, and whether a potential action “best fits the 

agency’s overall policies.” Heckler v. Chaney, 470 U.S. 821, 831 (1985). Given 

those concerns, “the Commission alone is empowered to develop that enforcement 

policy best calculated to achieve” its statutory mission. Moog Indus., Inc. v. FTC, 

355 U.S. 411, 413 (1958) (refusing to stay an FTC order against one firm until 

competing firms could be similarly restrained).

Congress enacted the MMA filing requirements so that the FTC could 

exercise its enforcement discretion with full knowledge of the universe of potential 

targets. The MMA was not designed as a pre-clearance review mechanism that 

immunizes companies’ agreements or provides antitrust counseling. The district 

court committed serious legal error when it turned the MMA into an escape hatch 

for defendants to evade antitrust scrutiny.

Case: 15-3559 Document: 003112231252 Page: 34 Date Filed: 03/11/2016
30

CONCLUSION

Regardless of its ruling on the ultimate merits, this Court should correct the 

legal errors committed by the district court, as set forth above.

 Respectfully submitted,

Deborah L. Feinstein

Director

Markus H. Meier

Acting Deputy Director

Bradley S. Albert

Deputy Assistant Director

Daniel W. Butrymowicz

Elizabeth R. Hilder

Jamie R. Towey

Attorneys

Bureau of Competition

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue NW

Washington, DC 20580

David C. Shonka

Acting General Counsel

Joel Marcus

Director of Litigation

/s/ Mark S. Hegedus

Mark S. Hegedus

Attorney

Office of the General Counsel

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue NW

Washington, DC 20580

202-326-2115

mhegedus@ftc.gov

Attorneys for Federal Trade 

Commission

March 11, 2016

Case: 15-3559 Document: 003112231252 Page: 35 Date Filed: 03/11/2016
NOS. 15-3559, 15-3591, 15-3681 & 15-3682

In re Wellbutrin Antitrust Litigation

COMBINED CERTIFICATES

BRIEF OF FEDERAL TRADE COMMISSION AS AMICUS CURIAE

IN SUPPORT OF NO PARTY

I hereby certify that:

1. This brief complies with the type-volume limitation of Fed. R. Civ. P. 

32(a)(7)(B). It has 6,950 words as counted by Microsoft Word 2010.

2. The electronic version of this brief is identical to the version sent in hard

copy to this Court.

3. The electronic version of this brief is in PDF and was scanned using 

Symantec Endpoint Protection Version 12.1.6318.6100 with virus 

definitions updated March 11, 2016. No viruses were detected.

4. I filed the electronic version of this brief with the Court via the CM/ECF 

system. The Notice of Docket Activity generated by CM/ECF system 

constitutes service upon all Filing Users in this proceeding. The docket for 

this proceeding indicates that all parties are Filing Users.

5. I have caused to be sent to the Court seven hard copies of this brief via 

FedEx Next Day Delivery to:

Clerk of Court

U.S. Court of Appeal, Third Circuit

21400 U.S. Courthouse

601 Market Street 

Philadelphia, PA 19106-1790

6. I am a member of the bar of this Court.

DATE: March 11, 2016 /s/ Mark S. Hegedus

Mark S. Hegedus

Case: 15-3559 Document: 003112231252 Page: 36 Date Filed: 03/11/2016