Rational Competition Policy and Reverse Payment Settlements in Hatch-Waxman Patent Litigation

47 Pages Posted: 31 Jul 2009 Last revised: 28 Dec 2013

David W. Opderbeck

Seton Hall University - School of Law

Date Written: July 29, 2009

Abstract

This paper examines the problem of 'reverse payment' settlements in patent litigation under the Hatch-Waxman Act. A reverse payment settlement involves a payment from a branded pharmaceutical company to a generic manufacturer, usually in return for the generic manufacturer’s agreement to delay market entry. Federal appellate courts, regulatory agencies and commentators are divided about the legality of such agreements. This paper argues that the importance of product market definition has been overlooked in existing treatments of the issue. The paper develops an empirically-based 'Settlement Competition Index' that could be used by courts and regulatory agencies to evaluate reverse payment settlements. A formula to calculate the Settlement Competition Index is provided and tested with hypothetical and real-world examples.

Keywords: patent, antitrust, reverse payment, Hatch-Waxman, ANDA , paragraph IV, pharmaceutical

JEL Classification: D24, I18, K11, K21

Suggested Citation

Opderbeck, David W., Rational Competition Policy and Reverse Payment Settlements in Hatch-Waxman Patent Litigation (July 29, 2009). Seton Hall Public Law Research Paper No. 1440780. Available at SSRN: https://ssrn.com/abstract=1440780 or http://dx.doi.org/10.2139/ssrn.1440780

David W. Opderbeck (Contact Author)

Seton Hall University - School of Law ( email )

One Newark Center
Newark, NJ 07102-5210
United States
973-642-8496 (Phone)

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