Activating Actavis

8 Pages Posted: 30 Aug 2013 Last revised: 30 Dec 2013

See all articles by Aaron S. Edlin

Aaron S. Edlin

University of California at Berkeley; National Bureau of Economic Research (NBER)

C. Scott Hemphill

New York University School of Law

Herbert Hovenkamp

University of Pennsylvania Carey Law School; University of Pennsylvania - The Wharton School

Carl Shapiro

University of California, Berkeley - Haas School of Business

Date Written: August 26, 2013

Abstract

In Federal Trade Commission v. Actavis, Inc., the Supreme Court provided fundamental guidance about how courts should handle antitrust challenges to reverse payment patent settlements. The Court came down strongly in favor of an antitrust solution to the problem, concluding that “an antitrust action is likely to prove more feasible administratively than the Eleventh Circuit believed.” At the same time, Justice Breyer’s majority opinion acknowledged that the Court did not answer every relevant question. The opinion closed by “leav[ing] to the lower courts the structuring of the present rule-of-reason antitrust litigation.”

This article is an effort to help courts and counsel fill in the gaps. We identify and operationalize the essential features of the Court’s analysis. We describe the elements of a plaintiff’s affirmative case, justifications that are ruled out by the Court's logic, and a test for viable justifications. For private cases, we outline an appropriate procedure for evaluating damages and suggest specific jury instructions.

Keywords: antitrust, drugs, FTC, Hatch-Waxman, innovation, patent, Paragraph IV, pay for delay, pharmaceuticals, regulation, reverse payment, settlement

JEL Classification: K21, L40, L41, L50

Suggested Citation

Edlin, Aaron S. and Hemphill, C. Scott and Hovenkamp, Herbert and Shapiro, Carl, Activating Actavis (August 26, 2013). Antitrust Magazine, Fall 2013, at 16, Columbia Law and Economics Working Paper No. 457, Available at SSRN: https://ssrn.com/abstract=2317241 or http://dx.doi.org/10.2139/ssrn.2317241

Aaron S. Edlin

University of California at Berkeley ( email )

Dept of Economics 549 Evans Hall #3880
Berkeley, CA 94720
United States
510-642-4719 (Phone)
510-643-0413 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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C. Scott Hemphill (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

Herbert Hovenkamp

University of Pennsylvania Carey Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
319-512-9579 (Phone)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Carl Shapiro

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States
510-642-5905 (Phone)

HOME PAGE: http://faculty.haas.berkeley.edu

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