Applying Litigation Economics to Patent Settlements: Why Reverse Payments Should be Per Se Illegal

Abstract:     
One of the most pressing issues in antitrust law is how to assess settlements of patent disputes that involve payments from brand name to generic drug manufacturers. At stake are billions of dollars, both in inflated prices to consumers attempting to meet their medical needs and in exposure to liability for drug manufacturers. This Article applies the economics of dispute resolution to clarify the costs and benefits of various approaches to assessing patent settlements in the context of the Hatch-Waxman Act. It concludes that reverse payments should be banned under a per se rule, unless and until courts are presented with evidence that brand name drug manufacturers are at some sort of systematic disadvantage in their settlement negotiations with generic drug manufacturers, an unlikely possibility.

Number of Pages in PDF File: 42

Keywords: patent settlements, antitrust, reverse payments, Hatch-Waxman Act

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