23-410 (L) 

23-418 (CON), 23-420 (CON), 23-423 (CON)

IN THE UNITED STATES COURT OF APPEALS 

FOR THE SECOND CIRCUIT

–––––––––––––––––––––––––––––––––––––––––––––

In re Bystolic Antitrust Litigation

(Caption continues on inside cover)

–––––––––––––––––––––––––––––––––––––––––––––

On Appeal from the United States District Court 

for the Southern District of New York

No. 20-cv-05735 (Hon. Lewis Liman) 

–––––––––––––––––––––––––––––––––––––––––––––

BRIEF OF AMICUS CURIAE FEDERAL TRADE COMMISSION

IN SUPPORT OF PLAINTIFFS-APPELLANTS AND REVERSAL

–––––––––––––––––––––––––––––––––––––––––––––

ANISHA S. DASGUPTA

General Counsel 

MARIEL GOETZ

Acting Director of Litigation

BRADLEY DAX GROSSMAN

Attorney

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

(202) 326-2994

Of Counsel:

MARKUS H. MEIER

BRADLEY S. ALBERT

DANIEL W. BUTRYMOWICZ

TIMOTHY KAMAL-GRAYSON

JOSEPH P. MATHIAS

FEDERAL TRADE COMMISSION

Washington, D.C. 20580 bgrossman@ftc.gov 
(Continued from front cover)

Watson Laboratories, Inc.,

 Debtor.

------------------------------

CVS Pharmacy, Inc., Rite Aid Corporation, Rite Aid Hdqtrs. Corp., J M Smith 

Corporation, on behalf of itself and all others similarly situated, DBA Smith Drug 

Company, KPH Healthcare Services, Inc., individually and on behalf of all others 

similarly situated also known as Kinney Drugs, Inc, Mayor and City Council of 

Baltimore, UFCW local 1500 Welfare Fund, Teamsters Western Region & Local 

177 Health Care Plan, Fraternal Order Of Police Miami Lodge 20, Insurance Trust 

Fund, Law Enforcement Health Benefits, Inc., Teamsters Local No. 1150 

Prescription Drug Benefit Plan, Teamsters Local 237 Welfare Fund and Teamsters 

Local 237 Retirees Benefit Fund, Albertsons Companies, Inc., H-E-B L.P., The 

Kroger Co., Walgreen Co.,

 Plaintiffs- Appellants,

v.

Forest Laboratories Inc., Forest Laboratories Ireland, LTD, Forest Laboratories 

Holdings Ltd., Forest Laboratories, LLC, Allergan Sales LLC, Allergan, Inc., 

Allergan USA, Inc., Abbvie Inc., Watson Pharma, Inc., Watson Laboratories, Inc. 

(NY), Watson Laboratories, Inc. (CT), Watson Pharmaceuticals, Inc., Actavis, Inc., 

Teva Pharmaceuticals USA, Inc., Torrent Pharmaceuticals Ltd., Torrent Pharma 

Inc., Amerigen Pharmaceuticals Ltd., AmerigenPharmaceuticals Inc., Glenmark 

Generics Inc., USA, Glenmark Generics Ltd., Glenmark Pharmaceuticals S.A., 

Hetero Labs Ltd, Hetero Drugs LTD., Hetero USA Inc., Indchemie Health 

Specialties Private Ltd., Alkem Laboratories Ltd., Ascend Laboratories, LLC, ANI 

Pharmaceuticals, Inc., Watson Laboratories, Inc. (NV), Watson Laboratories, Inc. 

(DE), Teva Pharmaceutical Industries Ltd., Glenmark Pharmaceuticals Ltd.,

 Defendants - Appellees.
i

TABLE OF CONTENTS

TABLE OF AUTHORITIES................................................................................... iii

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

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

BACKGROUND .......................................................................................................5

A. Drug Makers Can Use Side Deals To Disguise Anticompetitive 

Reverse Payments.........................................................................................5

B. Principles For Analyzing Reverse-Payment Settlements.............................7

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

SUMMARY OF ARGUMENT...............................................................................12

ARGUMENT...........................................................................................................14

I. Plaintiffs Stated A Plausible Claim That Forest Paid The Generic 

Companies Not To Compete.............................................................................14

A. Under Actavis, Plaintiffs Need Only Plead Market Power And Facts 

Allowing An Inference That A Large And Unjustified Reverse 

Payment Was Tendered..............................................................................14

B. Plaintiffs Met Their Pleading Burden By Plausibly Alleging That 

Forest Made Large, Unusual Reverse Payments........................................18

II. The District Court Contravened Actavis And Basic Pleading Standards .........20

A. The District Court Wrongly Proffered Its Own Justifications For 

The Side Deals And Used Them To Discredit The Complaint 

Allegations..................................................................................................21

B. The District Court Misapplied The Core Legal Standards For 

Resolving Motions To Dismiss..................................................................23

1. The court made improper findings of fact.........................................23

2. The court improperly assessed competing plausible inferences .......24

3. The court unfairly rejected plaintiffs’ claims for lack of 

supporting evidence ...........................................................................27
ii

4. The court failed to consider the complaint allegations as a 

whole and in context..........................................................................28

CONCLUSION........................................................................................................30
iii

TABLE OF AUTHORITIES

Cases

Anderson News, L.L.C. v. American Media, Inc., 680 F.3d 162 (2d Cir. 

2012) ........................................................................................................... 24, 26

Arista Records, LLC v. Doe 3, 604 F.3d 110 (2d Cir. 2010)...................................28

Bell Atlantic Corp. v. Twombly, 550 U.S. 554 (2007)................................ 11, 25, 26

Cal. Dental Ass’n v. FTC, 526 U.S. 756 (1999)........................................................ 9 

Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 566 U.S. 399 (2012).................... 4 

CBF Indústria de Gusa S/A v. AMCI Holdings, Inc., 850 F.3d 58 (2d Cir. 

2017) ..................................................................................................................24

Cohen v. S.A.C. Trading Corp., 711 F.3d 353 (2d Cir. 2013).................................28

Cont’l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690 (1962)..............30

Covad Comms. Co. v. Bell Atl. Corp., 398 F.3d 666 (D.C. Cir. 2005) ...................15

FTC v. AbbVie Inc., 976 F.3d 327 (3d Cir. 2020) ................................ 14, 17, 20, 21

FTC v. Actavis, Inc., 570 U.S. 136 (2013)...... 1, 2, 3, 5, 6, 7, 8, 9, 12, 14, 16, 21, 23

FTC v. Indiana Fed’n of Dentists, 476 U.S. 447 (1986)........................................... 7 

Impax Labs., Inc. v. FTC, 994 F.3d 484 (5th Cir. 2021)........................................... 3 

In re Aggrenox Antitrust Litigation, 94 F. Supp. 3d 224 (D. Conn. 2015) .............18

In re AndroGel Antitrust Litig. (No. II), No. 1:09-cv-955-TWT, 2018 WL 

2984873 (N.D. Ga. June 14, 2018)................................................................3, 26

In re Impax Labs, Inc., 994 F.3d 484 (5th Cir. 2021)..........................................6, 15

In re Impax Labs., Inc., 2019 WL 1552939 (F.T.C. Mar. 28, 2019)...................6, 15

In re Keurig Green Mountain Single-Serve Coffee Antitrust Litig., 383 F. 

Supp. 3d 187 (S.D.N.Y. 2019)...........................................................................15

In re Lipitor Antitrust Litig., 868 F.3d 231 (3d Cir. 2017) . 13, 14, 16, 17, 20, 21, 26

In re Loestrin 24 Fe Antitrust Litig., 814 F.3d 538 (1st Cir. 2016).................. 16, 27
iv

In re Nexium (Esomeprazole) Antitrust Litig., 842 F.3d 34 (1st Cir. 2016).............. 4 

In re Niaspan Antitrust Litigation, 42 F. Supp. 3d 735 (E.D. Pa. 2014).......... 17, 18

In re Opana ER Antitrust Litigation, 162 F. Supp. 3d 704 (N.D. Ill. 2016)............18

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

2015) ..............................................................................................................3, 27

King Drug Co. of Florence, Inc. v. Smithkline Beecham Corp., 791 F.3d 388 

(3d Cir. 2015)....................................................................................................... 4 

L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419 (2d Cir. 2011)..........................29

Longo v. Shore & Reich, Ltd., 25 F.3d 94 (2d Cir. 1994) .......................................24

Oakley v. Dolan, 980 F.3d 279 (2d Cir. 2020) ........................................................23

Ohio v. American Express Co., 138 S. Ct. 2278 (2018)............................................ 8 

Palin v. N.Y. Times Co., 940 F.3d 804 (2d Cir. 2019).............................................25

Peter F. Gatto Architecture, LLC v. Simone Dev. Corp., 602 F.3d 57 (2d Cir. 

2010) ..................................................................................................................27

United States v. Apple, Inc., 791 F.3d 290 (2d Cir. 2015).......................................25

Verizon Comms., Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 

(2004).................................................................................................................29

Viamedia, Inc. v. Comcast Corp., 951 F.3d 429 (7th Cir. 2020).............................15

Statutes

21 U.S.C. § 355.......................................................................................................... 4 

Pub. L. No. 108-173, §§ 1111-1118, 117 Stat. 2461-64............................................ 4 

Other Authorities

Agreements Filed with the Federal Trade Commission under the Medicare 

Prescription Drug, Improvement, and Modernization Act of 2003 

Overview of Agreements Filed in FY 2016: A Report by the Bureau of 

Competition.......................................................................................................... 7 
v

Agreements Filed with the Federal Trade Commission under the Medicare 

Prescription Drug, Improvement, and Modernization Act of 2003: 

Overview of Agreements Filed in FY 2017: A Report by the Bureau of 

Competition..........................................................................................................7

Association for Accessible Medicines, The U.S. Generic & Biosimilar 

Medicines Savings Report (Sept. 2022)...............................................................1

C. Scott Hemphill, An Aggregate Approach to Antitrust: Using New Data 

and Rulemaking to Preserve Drug Competition, 109 Colum. L. Rev. 629 

(2009)...............................................................................................................6, 7

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

Long-Term Impact (2011)....................................................................................4

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

Consumers Billions (2010) ..................................................................................4

Fed. Trade Comm’n, Then, now, and down the road: Trends in 

pharmaceutical patent settlements after FTC v. Actavis (May 28, 2019)........16
INTRODUCTION

Competition from generic drugs saves the U.S. health care system hundreds 

of billions of dollars annually.

1 To encourage competition, Congress established a 

mechanism that enables generic drug manufacturers to challenge patents associated 

with brand-name drugs. In some cases, parties have settled the resulting patent 

dispute with an agreement in which the brand-name drug manufacturer makes a 

“reverse payment,” yielding a highly unusual arrangement in which “a party with 

no claim for damages”—the generic company being sued for patent 

infringement—“walks away with money simply so it will stay away from the 

patentee’s market.” FTC v. Actavis, Inc., 570 U.S. 136, 152 (2013). 

Reverse payments raise antitrust concerns because they can “maintain 

supracompetitive prices to be shared among the patentee and the challenger rather 

than face what might have been a competitive market.” Id. at 157. Some reverse 

payments involve naked cash transfers, while others are clothed in pretextual side 

deals for goods or services. Both can harm competition.

In Actavis, the Supreme Court held that when the “basic reason” for a 

reverse payment is to “prevent the risk of competition,” the payment is unlawful.

Id. at 157-59. A “large” reverse payment that is “unjustified” by “traditional 

1 See Association for Accessible Medicines, The U.S. Generic & Biosimilar 

Medicines Savings Report 7 (Sept. 2022) (“Total generic and biosimilar savings in 

2021: $373 billion.”).
2

settlement considerations,” such as saved litigation costs, is prima facie evidence 

of anticompetitive harm. Id. at 156-59.

Plaintiffs here allege that Forest, maker of the branded high blood pressure 

drug Bystolic, paid six would-be generic rivals to stop challenging Forest’s patents 

and refrain from selling their products for at least eight years. Most of the 

payments took the form of contemporaneous side deals between Forest and the 

generic companies that were, according to plaintiffs, a disguise for Forest’s 

inducements. Although the district court found that Forest had made “large” 

reverse payments in five of the six arrangements, it concluded that plaintiffs had 

failed to plausibly allege that those payments were unjustified. The court dismissed 

the complaints with prejudice.

The Federal Trade Commission has primary responsibility for federal 

antitrust enforcement in the pharmaceutical industry. We submit this amicus brief 

because we believe that the district court’s ruling is inconsistent with Actavis, other 

antitrust precedent, and the law of pleading.

Under these authorities, plaintiffs can plead a side-deal reverse payment is

“unjustified” when they allege peculiar circumstances supporting the inference that 

the goods or services at issue do not fully explain the payment. Here, plaintiffs met 

that burden by alleging, among other things, that Forest’s many side deals were all 

(in the district court’s words) “related to” the generic companies’ commitments to 
3

stay off the market and that each individual deal lacked key attributes of a 

freestanding business arrangement. Plaintiffs allege, for example, that Forest had 

no prior interest in the side deals, had no need for them, eschewed the typical

formalities characteristic of such agreements, and failed to seek competing bids.

Those well-pleaded allegations sufficed to state a claim. But the district 

court rejected them by proffering its own procompetitive explanations for the side 

deals and finding that the complaints failed to refute those explanations. This 

approach contravened Actavis, which places the burden on defendants to “show ... 

that legitimate justifications are present.” 570 U.S. at 156. The court also failed to 

grant reasonable inferences in plaintiffs’ favor and compartmentalized plaintiffs’ 

allegations rather than assessing the complaints in full context. 

INTEREST OF THE FEDERAL TRADE COMMISSION

The FTC is an independent federal agency charged with promoting fair

competition. As exemplified by its role as petitioner in Actavis, the Commission

uses its law enforcement authority to challenge anticompetitive pharmaceutical

patent settlements administratively and in federal district courts.2 In addition, the 

2 See, e.g., Impax Labs., Inc. v. FTC, 994 F.3d 484, 493 (5th Cir. 2021); King Drug 

Co. of Florence v. Cephalon, Inc., 88 F. Supp. 3d 402 (E.D. Pa. 2015); In re 

AndroGel Antitrust Litig. (No. II), No. 1:09-cv-955-TWT, 2018 WL 2984873, at 

*1 (N.D. Ga. June 14, 2018).
4 

Commission files amicus curiae briefs in pharmaceutical antitrust litigation3 and 

has issued empirical studies addressing the competitive effects of generic 

substitution for brand-name drugs.4 The Supreme Court and other federal courts 

have relied on those studies. See, e.g., Caraco Pharm. Labs., Ltd. v. Novo Nordisk 

A/S, 566 U.S. 399, 408 (2012); King Drug Co. of Florence, Inc. v. Smithkline 

Beecham Corp., 791 F.3d 388, 404 n.21 (3d Cir. 2015). The FTC also reviews and 

publishes data regarding patent settlement agreements between drugmakers filed 

pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act 

of 2003. See Pub. L. No. 108-173, §§ 1111-1118, 117 Stat. 2461-64 (codified at 21 

U.S.C. § 355 note).

Because the Commission has a strong interest in ensuring the proper 

application of the antitrust laws, and Actavis specifically, we respectfully submit 

this brief under Federal Rule of Appellate Procedure 29(a). The district court’s 

3 See, e.g., In re Nexium (Esomeprazole) Antitrust Litig., 842 F.3d 34, 59-60 (1st 

Cir. 2016).

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

Long-Term Impact (2011), https://www.ftc.gov/sites/default/files/documents/ 

reports/authorized-generic-drugs-short-term-effects-and-long-term-impact-reportfederal-trade-commission/authorized-generic-drugs-short-term-effects-and-longterm-impact-report-federal-trade-commission.pdf; Fed. Trade Comm’n, Pay-forDelay: 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. 
5

ruling, unless corrected, threatens to impair the effective enforcement of antitrust 

laws in the pharmaceutical industry. The court prematurely decided complex 

factual questions that require expert analysis and consideration of evidence solely

in defendants’ possession. The ruling could make it prohibitively difficult to plead 

an antitrust violation under Actavis, even when (as here) the alleged facts strongly 

suggest that the parties colluded to preserve a brand-name monopoly and split the 

profits.

BACKGROUND

A. Drug Makers Can Use Side Deals To Disguise Anticompetitive 

Reverse Payments

Brand-name drugs are often covered by patents, which “may or may not be 

valid, and may or may not be infringed.” Actavis, 570 U.S. at 147. When a 

potential generic rival challenges those patents, the parties have an incentive to 

reach a settlement in which the brand manufacturer pays to keep the generic “out 

of the market.” Id. at 154. The patentholder avoids a potentially devastating 

challenge to its patent-based monopoly profits, and the challenger may make more 

money by splitting the monopoly profits than it would by winning its patent 

challenge and selling generic drugs. Id. In the process, “[t]he patentee and the 

challenger gain; the consumer loses.” Id.

The form of reverse-payment arrangements has evolved over time. The 

earliest involved the brand company compensating the generic company with cash. 
6

After the FTC and private plaintiffs began challenging these agreements, brand and 

generic companies began to disguise the payments using side deals. These deals

are typically negotiated and entered contemporaneously with a patent settlement 

and may involve the brand company ostensibly paying the generic for a product or 

service—for example, supplying raw materials, developing products, or selling 

intellectual property. See C. Scott Hemphill, An Aggregate Approach to Antitrust: 

Using New Data and Rulemaking to Preserve Drug Competition, 109 Colum. L. 

Rev. 629, 663-66 (2009).

When a side deal involves a brand company making a payment that is 

disproportionate to the product or service it received, the “true point of the 

payment[]” may be “to compensate the generics for agreeing not to compete.” 

Actavis, 570 U.S. at 145. Actavis itself involved side deals in which the brand paid 

the generic for services that allegedly had “little value.” Id. As the Commission has 

explained, when a side deal has “peculiar circumstances”—such as an abbreviated 

timeline, lack of prior interest, or inconsistency with industry standards—this 

“suggest[s] that the agreement may have been a means of masking value 

transferred in exchange for eliminating the risk of competition.” In re Impax Labs., 

Inc., 2019 WL 1552939, at *21 (F.T.C. Mar. 28, 2019), aff’d 994 F.3d 484 (5th 

Cir. 2021).
7 

Side deals are highly unusual. Outside the context of settling patent disputes, 

brand companies rarely seek the assistance of generic firms “with the activities that 

form the basis of side deals.” Hemphill, 109 Colum. L. Rev. at 666. And even in 

the patent settlement context, side deals are very uncommon. In fiscal years 2016

and 2017 (the latest for which the FTC has published data), only two of 458 

pharmaceutical patent settlements—less than 0.5%—included a side deal.5

 

B. Principles For Analyzing Reverse-Payment Settlements

Actavis held that reverse payments—whether involving naked cash or 

purported side deals—are subject to antitrust scrutiny because they have the 

“potential for genuine adverse effects on competition.” 570 U.S. at 154 (quoting 

FTC v. Indiana Fed’n of Dentists, 476 U.S. 447, 460-61 (1986)), 158-60. Antitrust 

liability turns on the “basic reason” the parties agreed to a reverse payment. Id. at 

158. If “the patentee seeks to induce the generic challenger to abandon its claims 

5 See Agreements Filed with the Federal Trade Commission under the Medicare 

Prescription Drug, Improvement, and Modernization Act of 2003: Overview of 

Agreements Filed in FY 2017: A Report by the Bureau of Competition at 1-2 (two 

side deals), available at https://www.ftc.gov/system/files/documents/reports/ 

agreements-filed-federal-trade-commission-under-medicare-prescription-drugimprovement-modernization/mma_report_fy2017.pdf; Agreements Filed with the 

Federal Trade Commission under the Medicare Prescription Drug, Improvement, 

and Modernization Act of 2003 Overview of Agreements Filed in FY 2016: A 

Report by the Bureau of Competition at 1-2 (zero side deals), available at 

https://www.ftc.gov/system/files/documents/reports/agreements-filled-federaltrade-commission-under-medicare-prescription-drug-improvement/mma_ 

report_fy2016.pdf. 
8

with a share of its monopoly profits that would otherwise be lost in the competitive 

market,” id. at 154, then “the antitrust laws are likely to forbid the arrangement,”

id. at 158. Conversely, where the payment to the generic reflects “avoided 

litigation costs or fair value for services, there is not the same concern that a 

patentee is using its monopoly profits to avoid the risk of patent invalidation or a 

finding of noninfringement.” Id. at 156. Courts faced with reverse-payment claims 

must therefore assess whether the payment is both “large” and “unjustified” by 

these other explanations. Id. at 157-58. 

That analysis takes place as part of the antitrust rule of reason, which Actavis

held applies to reverse-payment claims. Id. at 158-60. Under that framework, the 

plaintiff first must prove that a practice has an anticompetitive effect, either 

directly (e.g., through increased prices) or indirectly through “proof of market 

power plus some evidence that the challenged restraint harms competition.” See

Ohio v. American Express Co., 138 S. Ct. 2278, 2284 (2018). If the plaintiff does 

so, the burden shifts to the defendant to “show a procompetitive rationale.” Id. If 

the defendant makes that showing, the burden shifts back to the plaintiff to show 

that the procompetitive benefits “could be reasonably achieved through less 

anticompetitive means.” Id.

Actavis clarified that under the rule of reason, a plaintiff can show that a 

reverse-payment settlement is anticompetitive without “present[ing] every possible 
9

supporting fact or refut[ing] every possible pro-defense theory.” 570 U.S. at 159. 

Rather, “there is always something of a sliding scale in appraising reasonableness.” 

Id. (quoting Cal. Dental Ass’n v. FTC, 526 U.S. 756, 780 (1999)). 

C. Proceedings Below

Defendant Forest sells brand-name Bystolic, which treats high blood 

pressure. D. Ct. ECF 427 (“Compl.”) ¶ 1. Plaintiffs allege an unlawful scheme in 

which Forest colluded with the six generic-company defendants—Hetero, Torrent, 

Alkem/Indchemie, Glenmark, Amerigen, and Watson—to delay competition for 

generic versions of Bystolic. Id. ¶ 3. The generic companies had challenged

Forest’s Bystolic patents, seeking to market their products before the patents 

expired. Id. ¶¶ 139-40. Between October 2012 and November 2013, all six generic

companies agreed to abandon their patent challenges and defer entering the market 

for Bystolic until September 17, 2021. Id. ¶¶ 152, 163, 176, 181, 188, 195, 200.

At the time it entered these settlements, Forest paid the generic companies

cash to cover litigation expenses and executed contemporaneous side deals under

which it agreed to pay them millions of dollars more. Although the side deal 

payments were ostensibly for various goods or services,

6 plaintiffs allege that the 

6 Nominally, Forest paid Hetero to supply raw materials; Torrent to acquire 

patents; Alkem/Indchmie to supply other drugs; Glenmark for the right to jointly 

develop other products; Amerigen to invest in drug development efforts; and

Watson as a loan in exchange for releases from pre-existing obligations.
10

circumstances of the deals—individually and collectively—demonstrate that none 

was a “bona fide business arrangement” and all were, instead, “pretextual” ways 

for Forest to mask reverse payments. Id. ¶¶ 154-59, 163-228. Plaintiffs allege that 

the arrangements violated the antitrust laws. See, e.g., id. ¶¶ 256-61.

7

The district court dismissed the complaints for failure to state a claim. The 

court did not take issue with plaintiffs’ allegations that Forest enjoyed a monopoly 

in the relevant market. Compl. ¶¶ 238-53. The court purported to accept the truth 

of plaintiffs’ allegations that Forest’s settlements and side deals with each generic

company were “related to one another” and that five of these six arrangements

contained a “large reverse payment.” D. Ct. ECF 354 (“First Op.”) 33, 37, 44, 48, 

50, 52. The court also appeared to credit plaintiffs’ allegations that: (1) side deals 

are “common” ways to disguise reverse payments; (2) brand companies 

overpaying generic companies for the types of goods or services Forest purportedly 

purchased here are the “most common” type of pretextual side deal; and (3) brand 

and generic companies “seldom” enter into business arrangements of this sort 

when not settling patent litigation. D. Ct. ECF 438 (“Second Op.”) 5. 

The district court, however, concluded that plaintiffs had not plausibly 

alleged that any of the large reverse payments were unjustified. Purporting to apply

7 Although plaintiffs allege that the Commission investigated the Bystolic side 

deals, Compl. ¶ 198, this should not be construed as a determination that violations 

did or did not occur. 
11

Bell Atlantic Corp. v. Twombly, 550 U.S. 554 (2007), the court held that pleading 

an unjustified reverse payment under Actavis required plaintiffs to “show the 

absence of one or more factors that would be consistent with a pro-competitive 

justification” for the payments. Second Op. 17. The court went on to proffer its 

own procompetitive justifications for the side deals and find that the complaint

allegations had failed to disprove them. 

For example, the court found that Forest’s purported joint development 

agreement with Glenmark “gave Forest a seat at the table and an opportunity to 

learn from and exploit Glenmark’s expertise and know-how,” id. at 40, refusing to 

credit plaintiffs’ allegations that (1) Forest had shown no interest in this agreement

before the patent settlement; (2) full payment was due even if the venture failed;

and (3) the parties valued the relevant rights at $6 million when Forest paid $15 

million. Id. at 38-43. Likewise, the court found that Forest’s side deal to obtain 

ingredients from Hetero provided “obvious benefit[s]” to Forest, despite plaintiffs’ 

allegations that Forest had no need for those materials, paid an excessive price, and 

never sought bids from other suppliers. Id. at 21-24.

The district court also found that some of plaintiffs’ allegations of suspicious 

circumstances, like the fact that Forest and Amerigen did not finalize their side 

deal until after the FTC began investigating the arrangement, were “equally 

consistent” with an innocuous explanation. Id. at 47. And it rejected some 
12

allegations, such as the fact that Forest had not previously expressed interest in 

drug supply from Alkem/Indchemie, as conclusory. Id. at 37.

This appeal followed.

SUMMARY OF ARGUMENT

1. Plaintiffs challenging a reverse payment need only plead market power 

and facts from which a court can infer that a large and unexplained reverse 

payment was tendered. Actavis placed the burden of establishing procompetitive 

justifications for a reverse payment principally on “[a]n antitrust defendant.” 570 

U.S. at 156. This rule makes sense because defendants often have exclusive 

possession of information regarding potential justifications. With respect to side 

deals specifically, courts agree that plaintiffs need only identify peculiar 

circumstances that support the inference that the goods or services at issue do not 

fully explain the payments.

Plaintiffs have met these standards. Plaintiffs allege that Forest, a 

monopolist drug patentholder, made large reverse payments to at least five separate 

generic companies as part of settlements keeping those companies from 

introducing rival products for at least eight years. Plaintiffs further allege that 

Forest made these payments via side deals that were unusual and lacked obvious 

procompetitive rationales. Taken together, those allegations create a plausible 

inference that Forest unlawfully paid the generics not to compete.
13

2. When the district court dismissed these allegations, it contravened Actavis

and general rules of pleading. The court articulated its own procompetitive 

explanations for the side deals and faulted plaintiffs for not refuting them. But 

“Actavis does not require antitrust plaintiffs to come up with possible explanations 

for the reverse payment and then rebut those explanations in response to a motion 

to dismiss.” In re Lipitor Antitrust Litig., 868 F.3d 231, 256 (3d Cir. 2017). 

In deeming the side deals procompetitive, the district court improperly found 

facts contrary to the complaint allegations and failed to draw all reasonable 

inferences in plaintiffs’ favor, as the law requires. Instead, the court reasoned that 

plaintiffs’ allegations could have also been “consistent” with innocuous behavior,

see, e.g., Second Op. 21, 26, 30, 47, and found that the “more plausible reading of 

the[] facts” supported defendants, id. at 32 (emphasis added). But a district court 

may not dismiss a complaint on such a basis; ascertaining which side’s case is

more plausible is the purpose of discovery, summary judgment, and trial. The court 

also unfairly faulted plaintiffs for not producing evidence at the pleading stage. 

And it failed to assess the allegations of the complaints as a whole, instead 

focusing on granular allegations about each side deal while overlooking the 

complaints’ description of the suspicious context in which those deals were struck. 
14

ARGUMENT

I. Plaintiffs Stated A Plausible Claim That Forest Paid The Generic 

Companies Not To Compete

Under Actavis, a plaintiff alleging that a side deal constitutes an unjustified

reverse payment must allege facts that, taken together, support a reasonable 

inference that the side deal was not a freestanding business arrangement. Plaintiffs 

easily met that standard, and the district court erred by failing to recognize it.

A. Under Actavis, Plaintiffs Need Only Plead Market Power And Facts 

Allowing An Inference That A Large And Unjustified Reverse 

Payment Was Tendered

A complaint challenging a reverse payment states a claim if it alleges market 

power and “facts sufficient to support the legal conclusion that the settlement at 

issue involves a large and unjustified reverse payment.” FTC v. AbbVie Inc., 976 

F.3d 327, 351 (3d Cir. 2020) (quoting In re Lipitor Antitrust Litig., 868 F.3d 231, 

252 (3d Cir. 2017)). Courts have consistently recognized that the threshold for 

pleading that a payment is unjustified is a modest one, for three reasons.

First, Actavis “clearly placed the onus of explaining or justifying a large 

reverse payment on antitrust defendants.” Lipitor, 868 F.3d at 256-57. Actavis

explained that “[a]n antitrust defendant may show ... that legitimate justifications 

are present, thereby explaining the presence of the challenged term and showing 

[its] lawfulness.” 570 U.S. at 156. The Court added that “one who makes such a 

[reverse] payment may be unable to explain and to justify it.” Id. at 158. This is 
15

consistent with the rule-of-reason burden-shifting framework, under which 

procompetitive justifications are “question[s] of fact” that are only considered in 

response to a plaintiff’s initial case and are “not cognizable in support of a motion 

to dismiss.” Covad Comms. Co. v. Bell Atl. Corp., 398 F.3d 666, 676 (D.C. Cir. 

2005); see In re Keurig Green Mountain Single-Serve Coffee Antitrust Litig., 383 

F. Supp. 3d 187, 239 (S.D.N.Y. 2019) (“[A]ny procompetitive justification for 

such restrictions is not appropriately weighed on a motion to dismiss.”). 

Second, the information necessary to assess potential justifications for a side 

deal is normally “under the defendant’s control” and unavailable to plaintiffs

before discovery. See Viamedia, Inc. v. Comcast Corp., 951 F.3d 429, 464 (7th Cir. 

2020). The public will typically lack significant information about a brand’s need 

(or lack thereof) for the services provided in a side deal, whether the negotiations 

were consistent with industry norms, and even the substance of the deal itself. It is 

not reasonable to expect plaintiffs to “pre-emptively refute evidence of value not in 

their possession or control.” In re Impax Labs., Inc., 2019 WL 1552939, at *19 

(F.T.C. 2019), aff’d 994 F.3d 484 (5th Cir. 2021). Doing so would erect an 

insurmountable bar to meritorious antitrust cases, harming the public. Accordingly, 

the First Circuit declined to require “very precise and particularized estimates of 

fair value” at the pleading stage because those “may require evidence in the 
16

exclusive possession of the defendants, as well as expert analysis.” In re Loestrin 

24 Fe Antitrust Litig., 814 F.3d 538, 552 (1st Cir. 2016). 

Third, the mere presence of a reverse payment is highly unusual. As Actavis

observed, reverse-payment settlements are essentially unique to the pharmaceutical 

industry. 570 at 141, 147. Even there, reverse-payment settlements are rare. See id.

They are also unnecessary for effective settlement. Extensive data confirms that

“parties can—and do—settle without the brand company paying its potential 

generic competitor.” Fed. Trade Comm’n, Then, now, and down the road: Trends 

in pharmaceutical patent settlements after FTC v. Actavis (May 28, 2019).

8

For these reasons, courts have generally recognized that a plaintiff’s initial

burden to plead that a side-deal reverse payment is “unjustified” is a low threshold. 

In Lipitor, the Third Circuit revived allegations that a brand drug maker had paid a 

potential generic competitor by releasing a claim for damages it had against the 

generic in a different litigation. 868 F.3d at 253-54. The defendants argued that 

plaintiffs’ complaint omitted important “context” that explained the payment. Id. at 

256. But the court was unpersuaded, recognizing that “Actavis does not require 

antitrust plaintiffs to come up with possible explanations for the reverse payment 

and then rebut those explanations in response to a motion to dismiss.” Id. Rather, 

8 Available at https://www.ftc.gov/enforcement/competition-matters/2019/05/thennow-down-road-trends-pharmaceutical-patent-settlements-after-ftc-v-actavis. 
17

“an antitrust plaintiff need only allege the absence of a ‘convincing justification’ 

for the payment,” which the Lipitor plaintiffs had done. Id. at 256-58. 

Subsequently, in AbbVie, the Third Circuit again reversed the dismissal of a 

reverse-payment claim—this time concerning a side deal in which the brand agreed 

to supply a different drug product to the generic at a favorable price. See 976 F.3d

at 344-45. The court emphasized that a plaintiff need not “preempt every possible 

explanation” to plead a prima facie case under Actavis. Id. at 356 (cleaned up). 

And it rejected the lower court’s reasoning that the side deal might be justified by 

the fact that the generic paid the brand for the drug supply, explaining that while 

“perhaps . . . a valid defense,” that determination would require “factual 

assessments, economic calculations, and expert analysis that are inappropriate at 

the pleading stage.” Id. at 359 (quoting Lipitor, 868 F.3d at 261). To withstand 

dismissal, the FTC needed only to have alleged facts suggesting that the side deal 

was “unusual” and “c[ould] not be explained as an independent business deal.” Id.

at 357.

Most district courts have taken a similar approach. The court in In re 

Niaspan Antitrust Litigation, 42 F. Supp. 3d 735 (E.D. Pa. 2014), acknowledged 

that plaintiffs’ allegations concerning a “spurious” side deal lacked “exquisite 

detail,” and that defendants may ultimately be able to rebut them. Id. at 752-53. 

But the court nevertheless held that “Twombly does not require an antitrust plaintiff 
18

to plead facts that, if true, definitively rule out all possible innocent explanations” 

for a reverse payment. Id. at 753. Likewise, in In re Opana ER Antitrust Litigation, 

162 F. Supp. 3d 704 (N.D. Ill. 2016), the court declined to consider justifications at 

the pleading stage because “to establish conclusively that the payment . . . was 

made for procompetitive reasons, the Court would need to make inferences from 

the allegations in the complaints in [d]efendants’ favor.” Id. at 719. And in In re

Aggrenox Antitrust Litigation, 94 F. Supp. 3d 224 (D. Conn. 2015), the court 

denied a motion to dismiss because arguments about valuation of and justifications 

for the side deal were “sufficiently factual to require discovery.” Id. at 244-45.

B. Plaintiffs Met Their Pleading Burden By Plausibly Alleging That 

Forest Made Large, Unusual Reverse Payments

The complaint allegations state a plausible Actavis claim. Forest allegedly 

was a monopolist in the relevant product market. See Compl. ¶¶ 238-53. The court 

found that plaintiffs had plausibly alleged that Forest entered a series of patent 

settlement agreements keeping six separate generic companies off the market for 

eight years; that each settlement included a “related” contemporaneous side deal; 

and that five of those arrangements included a “large reverse payment.” First Op. 

33, 37, 44, 48, 50, 52.9 The court also appeared to credit plaintiffs’ allegations that 

side deals “common[ly]” mask reverse payments, that side deals of the sort at issue 

9 The district court held that Forest’s arrangement with Watson did not amount to a 

large reverse payment. Second Op. 47-51; Compl. ¶¶ 211-15. 
19

here are the “most common” types for disguising reverse payments, and that such 

deals are “seldom” entered otherwise. Second Op. 5.

These allegations alone raise serious red flags. As plaintiffs explain, “[i]f 

Forest had been truly interested in entering into legitimate business partnerships 

with the Generic Defendants ... common sense dictates that Forest would have 

done so prior to and separate from the settlement of the ... Patent Litigation.” 

Compl. ¶ 158. This claim would have force when describing a single side deal; 

here, Forest made at least five separate, lucrative arrangements with generic 

rivals—all “related to” (First Op. 33) those rivals’ commitments not to compete 

until an identical date eight years later. The large number of side deals, all linked to 

eight years of deferred competition, makes it even more plausible that those deals 

served, at least in part, as payments not to compete. 

But plaintiffs went much further, including specific details about each 

transaction that amply support the inference that Forest’s payments are not 

explained by the value of the generics’ goods or services. For instance, the Hetero 

supply agreement was short and skeletal; unnecessary because of Forest’s 

longstanding and successful relationship with its existing supplier; executed 

without a competitive bidding process; and especially unusual because Hetero had 

never manufactured the material before. Compl. ¶¶ 164-68, 170-72. In the Torrent 

agreement, Forest purchased patents for the active ingredient in Bystolic despite 
20

having previously spent $357 million to acquire what it called “all” Bystolic 

patents and despite never having indicated that it planned to develop a nextgeneration Bystolic. Id. ¶ 179. And with Glenmark, Forest entered a jointdevelopment agreement related to products in which it had expressed no prior 

interest; received “largely illusory” rights that it valued at far less than the amount 

it paid; and committed itself to making full “milestone payments” even if the 

venture was a failure. Id. ¶¶ 188-93. See also id. ¶¶ 182, 185 (Forest did not need 

the Alkem/Indchemie supply agreement and conducted little diligence); ¶¶ 197-98 

(Forest had no previous interest in Amerigen’s drug development efforts, and the 

parties only executed an actual agreement upon FTC scrutiny). 

In each of these instances, the complaints alleged sufficient facts that, taken 

as true, support a reasonable inference that these side deals were unusual and 

lacked the indicia of an independent business transaction. See AbbVie, 976 F.3d at 

357; Lipitor, 868 F.3d at 256-58. Though defendants may ultimately be able to

justify these transactions, those justifications are not properly evaluated on a 

motion to dismiss; they are defendants’ burden to prove at step two of the rule of 

reason.

II. The District Court Contravened Actavis And Basic Pleading Standards 

When the district court dismissed the complaints, it misapplied Actavis and 

fundamental principles for resolving Rule 12(b)(6) motions. Despite Actavis’s 
21

teaching that defendants must justify their reverse payments, 570 U.S. at 156, 58, 

the court offered its own procompetitive justifications for the side deals and faulted 

plaintiffs for not refuting them in the complaints. The court also found disputed 

facts against plaintiffs, failed to grant reasonable inferences in plaintiffs’ favor, 

improperly demanded that plaintiffs furnish supporting evidence, and failed to 

consider the complaint allegations in full context. All of this was improper at the 

pleading stage.

A. The District Court Wrongly Proffered Its Own Justifications For 

The Side Deals And Used Them To Discredit The Complaint 

Allegations

As discussed at pp. 14-18, because defendants have the burden to justify 

their reverse payments, plaintiffs need not “come up with possible explanations for 

the reverse payment and then rebut those explanations” to survive a motion to 

dismiss. Lipitor, 868 F.3d at 256; see also AbbVie, 976 F.3d at 356 (plaintiffs can 

meet prima facie case without “preempting every possible explanation” for a 

reverse payment). The district court acknowledged these holdings, First Op. 32, but

did not follow them. The court instead faulted plaintiffs for failing to preemptively

rebut the court’s own procompetitive explanations, and dismissed the complaints

on that basis.

For example, the district court found that the Hetero supply agreement 

“would have value to Forest” because “Forest was dependent on a sole supplier”—
22

despite plaintiffs’ allegations that Forest’s existing supplier was adequate and that 

Forest had no additional need for raw materials. Second Op. 27. The court 

introduced speculation (nowhere alleged in the complaints) that Forest could have 

been “simultaneously expressing dissatisfaction” with its current supplier. First Op. 

39. The court brushed aside plaintiffs’ allegation that Forest’s lack of competitive 

bidding was suspicious, drawing its own contrary “inference” that with 

“specialized” pharmaceuticals, “there would be no need or opportunity for 

competitive bidding,” and that agreements can be “mutually beneficial [and] procompetitive” without competing bids. Second Op. 24. 

The court repeated these errors when addressing the other side deals. The 

court rebuffed plaintiffs’ allegations that Forest’s side deal to buy patents from

Torrent was pretextual, holding that plaintiffs had failed to refute the possibility 

that Forest might need Torrent’s patents to “develop and sell a new non-Bystolic” 

product someday. Id. at 30. Worse, the court flatly declared that Forest’s product

development deal with another generic defendant, Glenmark, provided “substantial 

value” by giving “Forest a seat at the table and an opportunity to learn from and 

exploit Glenmark’s expertise and know-how.” Id. at 40. With that assertion, the 

court rejected plaintiffs’ allegations that Forest had no interest in the Glenmark 

collaboration apart from the patent settlement and valued its rights at only $6 

million when it paid $15 million. Id. at 38-39.
23

Requiring plaintiffs to anticipate these hypothesized justifications in their 

complaints contravened the teachings of Actavis. The Supreme Court directly

recognized that the mere “possibility” that a reverse payment might be 

procompetitive “does not justify dismissing the ... complaint.” Actavis, 570 U.S. at 

156. Justifications are instead issues for summary judgment and trial, after 

discovery reveals what (if anything) defendants can support with evidence.

B. The District Court Misapplied The Core Legal Standards For 

Resolving Motions To Dismiss

When the district court refused to credit the complaints’ factual allegations, 

it defied the basic principles governing Rule 12(b)(6) in at least four ways. The 

court found facts contrary to the complaint allegations, failed to grant all 

reasonable inferences in plaintiffs’ favor, rejected plaintiffs’ well-pleaded 

allegations due to a lack of supporting evidence, and failed to read the complaint

allegations in full context. 

1. The court made improper findings of fact

As discussed on pp. 21-22, the district court credited its own procompetitive 

justifications over the complaint allegations, finding as fact that the side deals 

provided “value” to Forest. Second Op. 26-27, 32, 34-35, 40-42, 45-46. In the 

process, the court breached the cardinal rule that courts “must assume the truth of 

the plaintiff’s allegations and avoid resolving factual disputes” when resolving a 

motion to dismiss. Oakley v. Dolan, 980 F.3d 279, 284 (2d Cir. 2020). This Court 
24

corrected a similar “analytical problem[]” in Anderson News, L.L.C. v. American 

Media, Inc., 680 F.3d 162, 189 (2d Cir. 2012), where the lower court found the 

plaintiff’s “view of the events implausible ... essentially ma[king] a number of 

other factual findings.” Id. at 190 (cleaned up). The value of a contract or asset—

along with a party’s reasons for entering or acquiring it—are quintessential factual 

determinations, see, e.g., Longo v. Shore & Reich, Ltd., 25 F.3d 94, 98 (2d Cir. 

1994), and the court should have allowed the parties to test plaintiffs’ factual 

allegations in discovery and potentially at trial.

2. The court improperly assessed competing plausible inferences

The district court also failed to “draw[] all reasonable inferences in the

plaintiff’s favor.” CBF Indústria de Gusa S/A v. AMCI Holdings, Inc., 850 F.3d 58, 

77 (2d Cir. 2017) (cleaned up). The court rejected various allegations of peculiar or 

suspicious circumstances surrounding the side deals by holding that the facts 

“could be entirely consistent with” innocuous behavior. See, e.g., Second Op. 21, 

26-27, 30. In the court’s view, “conduct that is consistent with and equally 

explicable by a pro-competitive justification ... is not sufficient to state a claim.” 

First Op. 27. This ruling was error. A district court may not dismiss a complaint 

simply because “an innocuous interpretation of the defendant’s conduct may be 

plausible.” Anderson News, 680 F.3d at 189-90. It was “not the district court’s 

province to dismiss a plausible complaint because,” in the court’s view, “it is not 
25

as plausible as the defendant’s theory.” Palin v. N.Y. Times Co., 940 F.3d 804, 815 

(2d Cir. 2019).

10

The district court reached its mistaken ruling by misreading Bell Atlantic 

Corp. v. Twombly, 550 U.S. 544 (2007), which stated that plaintiffs cannot plead 

the existence of an antitrust conspiracy by describing facts that were “just as much 

in line with a wide swath of rational and competitive business strategy.” Id. at 554.

See Second Op. 19. The Supreme Court’s observation reflected crucial differences 

in substantive law that do not apply here. Twombly did not address the rule of 

reason or procompetitive justifications, but dealt with an allegedly per se unlawful 

antitrust conspiracy stemming from an unwritten agreement. See Twombly, 550 

U.S. at 550-53. In that context, courts have long “cautioned against drawing an 

inference of conspiracy from evidence that is equally consistent with independent 

conduct as with illegal conspiracy.” United States v. Apple, Inc., 791 F.3d 290, 315 

(2d Cir. 2015) (emphasis added).11

10 The district court’s own phrasing suggests that it was reasonable to infer a 

culpable explanation from the alleged facts. It repeatedly described its preferred 

innocuous explanations as “equally” or “more” plausible as the suspicious ones. 

Second Op. 24, 32, 33, 45, 51.

11 The facts alleged in the complaint in Twombly suggested independent action 

only. See 550 U.S. at 566-67. That did not meet the substantive standard for 

establishing unlawful conspiracy, under which “an allegation of parallel conduct 

and a bare assertion of conspiracy will not suffice.” Id. at 556.
26

Here, by contrast, plaintiffs’ allegations met what Actavis requires to state a

reverse-payment based antitrust claim. The complaints allege that defendants acted 

pursuant to an express written agreement—which is “clear, direct evidence” of 

concerted action. In re Androgel Antitrust Litig. (No. II), No. 1:09-CV-955-TWT, 

2018 WL 2984873, at *8 (N.D. Ga. June 14, 2018). The question is whether the 

agreements unreasonably restrained trade under the rule of reason. As discussed (at 

14-18), plaintiffs have no burden to rule out justifications at the pleading stage 

simply because those might be equally consistent with a culpable inference. See, 

e.g., Lipitor, 868 F.3d at 256. To the contrary, Twombly stressed that “a wellpleaded complaint may proceed even if it strikes a savvy judge that actual proof of 

those facts is improbable.” 550 U.S. at 556 (cleaned up). Regardless of any 

reservations the district court held about plaintiffs’ ability to prove the violation, 

the court was required to accept their allegations at the pleading stage.

Indeed, this Court has confirmed that under Twombly, “the question ... is not 

whether there is a plausible alternative to the plaintiff’s theory.” Anderson News, 

680 F.3d at 189. A court may not “dismiss[] the complaint on the basis of the 

court’s choice among plausible alternatives.” Id. at 190. Yet that is exactly what 

the district court did here, when it weighed competing inferences and chose what it 

described as “[t]he more plausible reading of the[] facts.” Second Op. 32

(emphasis added); see also id. at 24, 33, 45. 
27

3. The court unfairly rejected plaintiffs’ claims for lack of 

supporting evidence

The First Circuit has cautioned that when a court considers the sufficiency of

reverse-payment allegations, it may not “convert[] Twombly’s mandates into a 

requirement that antitrust plaintiffs provide evidentiary support or set forth other 

‘plus factors’ to demonstrate ... plausibility.” Loestrin, 814 F.3d at 549 (reversing 

dismissal). The district court here did just that. 

When the district court rejected plaintiffs’ charge that Forest’s patent side 

deal with Torrent was pretextual, the court appeared to hold plaintiffs’ lack of 

expert testimony against them. The court distinguished this case from one in which 

the Commission and its co-plaintiffs defeated summary judgment by presenting 

“expert opinions that [defendant] went outside industry norms and failed to 

conduct due diligence prior to licensing the Generic Defendants’ IP.” Second Op. 

29 (quoting King Drug of Florence, Inc. v. Cephalon, Inc., 88 F. Supp. 3d 402, 

420-21 (E.D. Pa. 2015)). Comparing plaintiffs’ allegations unfavorably to King 

Drug, the district court remarked, “Plaintiffs do not allege similar facts here.” Id.

That reasoning was improper, as a district court may not dismiss complaint 

allegations that require “the aid of ... expert testimony” to resolve. Peter F. Gatto 

Architecture, LLC v. Simone Dev. Corp., 602 F.3d 57, 65 (2d Cir. 2010). Expert 

analysis will almost certainly be needed to understand the complex, highly 

technical industry standards for licensing drug patents; but at the pleading stage, 
28

the court was required to accept plaintiffs’ allegations detailing how Forest’s side 

deals with Torrent and the other generics contravened industry norms.

The district court also wrongly rebuked plaintiffs for failing to provide 

“evidence” to support allegations they had pleaded based on “information and 

belief” and public information. Second Op. 22, 37-38 & 40 n.17. For instance, the 

court repeatedly discounted plaintiffs’ charges that there was no publicly available 

evidence of Forest engaging in a bid-selection process or showing prior interest in 

certain collaborations, stating that “[t]he absence of evidence is not evidence of 

absence.” Id. at 23, 37-38. But this Court has held that plaintiffs may plead facts 

based “upon information and belief where the facts are peculiarly within the 

possession and control of the defendant, or where the belief is based on factual 

information that makes the inference of culpability plausible.” Arista Records, LLC 

v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010) (cleaned up). This is such a case: As 

discussed at pp. 15-16, the facts regarding defendants’ business needs and 

contractual negotiations are uniquely within their custody and control and are 

largely unavailable to plaintiffs before discovery. 

4. The court failed to consider the complaint allegations as a whole 

and in context

Finally, the district court did not follow this Court’s directives to “read the 

allegations of the complaint as a whole in context,” Cohen v. S.A.C. Trading Corp., 

711 F.3d 353, 360 (2d Cir. 2013), and consider “the full factual picture” before 
29

granting a motion to dismiss, L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 

430 (2d Cir. 2011). These requirements are especially critical in antitrust cases, 

where courts “must always be attuned to the particular structure and circumstances 

of the industry at issue.” Verizon Comms., Inc. v. Law Offices of Curtis V. Trinko, 

LLP, 540 U.S. 398, 411 (2004).

In this case, the district court lost sight of the entire factual picture, which 

showed a viable Actavis claim. The court purportedly accepted plaintiffs’ 

allegations that Forest induced six separate generic companies to agree not to 

launch rival drugs for the next eight years, and made lucrative reverse payments to 

at least five of those companies as part of “related” “side deals” executed at the 

same time. Supra pp. 10, 18-19. Taking these allegations as true, a plausible 

inference would be that the side-deal payments served, at least in part, as 

consideration for the generics’ simultaneous pledges not to compete. And yet the 

court trained its sights exclusively on features of individual side deals without 

explaining why dismissal was appropriate given this overall context. 

The district court compounded this error by holding that certain allegations 

about each side deal were “alone” insufficient, without considering the totality of 

circumstances that made each deal inconsistent with a normal business 

arrangement. See First Op. 34-57. For example, plaintiffs allege a panoply of 

reasons why the Forest-Hetero supply deal was peculiar, including that Forest
30

already had sufficient supply; did not follow the normal industry practice of getting 

competitive bids; entered a cursory agreement lacking the normal details; and 

chose Hetero even though Hetero had never manufactured the materials before. 

Compl. ¶¶ 165, 168, 170-72. Rather than considering whether a reasonable 

factfinder could infer from this combination of alleged unusual features—viewed 

in the context of a pattern of other similarly unusual agreements—that the deal was 

a disguised reverse payment, the district court reviewed and rejected each 

allegation as insufficient in isolation.12

Such a siloed analysis stands plainly in conflict with Supreme Court 

precedent. In the antitrust context, the Supreme Court has admonished that 

“plaintiffs should be given the full benefit of their proof without tightly 

compartmentalizing the various factual components and wiping the slate clean 

after scrutiny of each.” Cont’l Ore Co. v. Union Carbide & Carbon Corp., 370 

U.S. 690, 698-99 (1962). This Court should not let these errors stand.

CONCLUSION

The district court’s judgment dismissing the complaints should be reversed.

12 See, e.g., First Op. 39 (“[T]he allegation of sufficient existing supply, alone, does 

not make the inference of culpability plausible.” (emphasis added)); Second Op. 

26-27 (“The mere fact that the Final Term Sheet was a preliminary agreement . . . 

is insufficient to raise a reasonable inference that the agreement itself was not a 

bona fide transaction.” (emphasis added)).
31

Respectfully submitted,

ANISHA S. DASGUPTA

General Counsel 

MARIEL GOETZ

Acting Director of Litigation

June 20, 2023 /s/ Bradley Grossman

BRADLEY DAX GROSSMAN

Attorney 

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

bgrossman@ftc.gov

202-326-2994

Of Counsel:

MARKUS H. MEIER

BRADLEY S. ALBERT

DANIEL W. BUTRYMOWICZ

TIMOTHY KAMAL-GRAYSON

JOSEPH P. MATHIAS

FEDERAL TRADE COMMISSION

Washington, D.C. 20580
CERTIFICATE OF COMPLIANCE

I certify that the foregoing brief complies with the volume limitations of 

Local Rules 29.1(c) and 32.1(a)(4)(A) because it contains 6,991 words, excluding 

the parts of the brief exempted by Fed. R. App. P. 32(f), and that it complies with 

the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style 

requirements of Fed. R. App. P. 32(a)(6) because it was prepared using Microsoft 

Word in 14 point Times New Roman type. 

June 20, 2023 /s/ Bradley Grossman

Bradley Dax Grossman 

Attorney 

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580
CERTIFICATE OF SERVICE

I certify that on June 20, 2023, I served the foregoing on counsel of record 

using the Court’s electronic case filing system. All counsel of record are registered 

ECF filers.

June 20, 2023 /s/ Bradley Grossman

Bradley Dax Grossman 

Attorney 

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580