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

42 Pages Posted: 15 Oct 2009 Last revised: 28 Dec 2013

Joshua P. Davis

University of San Francisco - School of Law

Date Written: October 1, 2009

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.

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

Suggested Citation

Davis, Joshua P., Applying Litigation Economics to Patent Settlements: Why Reverse Payments Should be Per Se Illegal (October 1, 2009). Lawyers, Drugs & Money Symposium, Lawyers, Drugs & Money: A Prescription for Antitrust Enforcement in the Pharmaceutical Industry; Univ. of San Francisco Law Research Paper No. 2009-24. Available at SSRN: https://ssrn.com/abstract=1489090 or http://dx.doi.org/10.2139/ssrn.1489090

Josh Paul Davis (Contact Author)

University of San Francisco - School of Law ( email )

2130 Fulton Street
San Francisco, CA 94117
United States

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