We have considered before [see here, and here] how U.S. courts are handling reverse payment cases in the wake of FTC v. Actavis, 133 S. Ct. 2223 (June 17, 2013). Now, for the first time, a federal jury has weighed in on one of these cases. On Dec. 5, 2014, in In re Nexium (Esomeprazole) Antitrust Litigation, MDL No. 2409, a federal jury in Massachusetts returned a verdict in favor of defendants AstraZeneca PLC and Ranbaxy Inc.

AstraZeneca held a patent covering its popular Nexium® heartburn pill. Ranbaxy and other generic drug companies interested in introducing generic versions challenged that patent with a paragraph IV ANDA certification. Ranbaxy was the first to file, and therefore would have had 180 days of market exclusivity if successful in the litigation. Instead of litigating, however, Ranbaxy and AstraZeneca settled, with AstraZeneca agreeing to pay Ranbaxy in exchange for Ranbaxy agreeing to stay off the market until a specified date, extending AstraZeneca’s patent monopoly through that date. A class of consumers and third-party payors filed suit, alleging that the settlement agreement forced them to pay high patent monopoly prices much longer than they should have, amounting to antitrust violations.

This case cuts to the heart of an issue with which the courts have struggled. If a generic drug company would have won its patent challenge in court, then the type of settlement described above looks like illegal market division. But, if the challenged patent is valid, then it is in the nature of a patent to allow its holder to enjoy a monopoly of the market for the term of the patent.

The Eleventh Circuit Court of Appeals decided, in FTC v. Watson Pharms., Inc., 677 F.3d 1298, 1312 (2012) that “absent sham litigation or fraud in obtaining the patent, a reverse payment settlement is immune from antitrust attack so long as its anticompetitive effects fall within the scope of the exclusionary potential of the patent.” The U.S. Supreme Court tackled the issue again on appeal from the Eleventh Circuit and reversed in Actavis. Chief Justice John R. Roberts wrote a strong dissent, agreeing that patent law provides patent holders with an exception to antitrust law for the duration of its patent and so long as the anticompetitive effects of the settlement did not carry over beyond the patent scope or after patent protection lapsed. But, Justice Stephen G. Breyer, writing for the majority, allowed that if the plaintiffs could prove that the reverse payment was harmful to competition under the “rule of reason,” even before the official or legal termination of patent protection, antitrust law supports holding the defendants accountable.

The Massachusetts federal jury had an opportunity to apply Breyer’s “rule of reason.” The jury found AstraZeneca exercised market power within the relevant market, the settlement of the AstraZeneca-Ranbaxy patent litigation included a large and unjustified payment by AstraZeneca to Ranbaxy, and the settlement was unreasonably anticompetitive. But, the jury was asked, “Had it not been for the unreasonably anticompetitive settlement, would AstraZeneca have agreed with Ranbaxy that Ranbaxy might launch a generic version of Nexium before May 27, 2014?” The jury answered “no.” The result is that the settlement did not violate antitrust law. The jury may have struggled with exactly the point Chief Justice Roberts raised in Actavis. The jury was told that patents give the patentee a legal monopoly, and there was no evidence that the patent was invalid. So, why would the jury find that the settlement agreement was contrary to law when it simply protected a patentee’s rights as they stood at the time of the settlement? What may not be clear to the jury is that Ranbaxy and AstraZeneca’s agreement practically freezes out other potential challengers to the patent. Ranbaxy and AstraZeneca profit at the expense of a potential determination that could lower the prices of drugs for consumers.

This case is far from over. Plaintiffs question the logic of the verdict. During jury deliberations Plaintiffs even filed a motion for a curative jury instruction. Plaintiffs noted that the jury requested clarification on the topic of anticompetitive effects and pro-competitive justifications, and argued that the jury “needed education about how to weigh” them. There is no indication on the docket on how Judge William G. Young responded to Plaintiffs’ motion, and the official Jury Instructions have not been posted on CM/ECF. Further analysis of that information will give insight into how future courts may instruct juries struggling with these same questions.