Reverse Payment Agreement for the United States

Reverse Payment Agreement Template for United States

A Reverse Payment Agreement is a legal settlement between a pharmaceutical patent holder and a generic manufacturer, where the patent holder pays the generic manufacturer to delay market entry of a generic version of a drug. Under U.S. law, these agreements are subject to antitrust scrutiny following the FTC v. Actavis decision, requiring careful drafting to ensure compliance with competition laws while protecting intellectual property rights.

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What is a Reverse Payment Agreement?

Reverse Payment Agreements emerged from patent disputes under the Hatch-Waxman Act framework in the United States. These agreements are used when a generic manufacturer challenges a brand pharmaceutical company's patent, and the parties decide to settle the dispute. The settlement typically involves the brand company making payments to the generic manufacturer in exchange for delayed market entry. Following the Supreme Court's decision in FTC v. Actavis (2013), these agreements require careful structuring to demonstrate their pro-competitive benefits and avoid antitrust violations.

What sections should be included in a Reverse Payment Agreement?

1. Parties: Identification of the patent holder and generic manufacturer

2. Background: Context of the patent dispute and basis for settlement

3. Definitions: Key terms including Patent Rights, Licensed Products, Territory

4. Settlement Terms: Details of the reverse payment and settlement conditions

5. Entry Date Provisions: Agreed date for generic market entry and related conditions

6. Payment Terms: Structure and timing of payments

7. Regulatory Compliance: FTC filing and reporting obligations

8. Representations and Warranties: Standard and specific warranties regarding patent rights and compliance

9. Term and Termination: Duration of agreement and termination provisions

10. Confidentiality: Protection of confidential information exchanged under the agreement

11. Governing Law: Applicable law and jurisdiction

What sections are optional to include in a Reverse Payment Agreement?

1. Supply Agreement Terms: Used when the agreement includes supply arrangements between the patent holder and generic manufacturer

2. Co-Promotion Provisions: Terms for joint marketing activities when parties agree to co-promote products

3. Development Collaboration: Terms for joint product development when agreement includes R&D cooperation

4. License Grant: Specific terms of any patent license granted as part of the settlement

5. Quality Control: Quality assurance provisions when product manufacturing is involved

What schedules should be included in a Reverse Payment Agreement?

1. Schedule A - Patent Schedule: List of relevant patents and patent applications covered by the agreement

2. Schedule B - Product Specifications: Technical details of licensed products and quality standards

3. Schedule C - Payment Schedule: Detailed payment terms, calculations, and milestone payments

4. Schedule D - FTC Compliance Forms: Required regulatory filing documents and certificates

5. Schedule E - Entry Date Details: Specific terms and conditions related to market entry timing

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

United States

Publisher

Genie AI

Cost

Free to use
Relevant legal definitions
Clauses
Industries

Sherman Antitrust Act: Primary federal antitrust law that prohibits anticompetitive business practices and monopolistic conduct. Critical for ensuring reverse payment agreements don't violate antitrust provisions.

Federal Trade Commission Act: Empowers the FTC to prevent unfair methods of competition and deceptive practices. Key in regulating and monitoring reverse payment agreements.

Clayton Act: Supplements the Sherman Act by prohibiting specific anticompetitive practices. Relevant for reviewing the competitive effects of reverse payment agreements.

Hatch-Waxman Act: Drug Price Competition and Patent Term Restoration Act - Establishes framework for generic drug approval and patent challenges, fundamental to reverse payment agreement context.

Patent Act (35 U.S.C.): Federal patent law governing patent rights and enforcement, essential for understanding the underlying patent disputes in reverse payment agreements.

FTC v. Actavis (2013): Landmark Supreme Court decision establishing that reverse payment agreements are subject to rule of reason analysis under antitrust law.

Medicare Modernization Act of 2003: Requires pharmaceutical companies to file patent settlements with the FTC, including reverse payment agreements.

State Antitrust Laws: Various state-specific antitrust regulations that may affect the enforceability and terms of reverse payment agreements.

Hart-Scott-Rodino Act: Requires companies to file notifications with FTC and DOJ for certain transactions, potentially applicable to significant reverse payment agreements.

FDA Regulations: Federal drug regulations that govern pharmaceutical product approval, marketing, and competition, providing regulatory context for reverse payment agreements.

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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