The Stay Dilemma: Examining Brand and Generic Incentives for Delaying the Resolution of Pharmaceutical Patent Litigation
45 Pages Posted: 21 Feb 2012 Last revised: 22 Feb 2014
Date Written: December 1, 2011
The Hatch-Waxman Act encourages generic drug companies to challenge the patents on brand name drugs by awarding the first generic challenger 180 days of generic marketing exclusivity, a bounty often worth millions of dollars. Challenging a patent usually triggers patent infringement litigation from the brand name firm. In response to the increased numbers of patent challenges, brand name firms have adopted an “evergreening” strategy — filing for multiple patents for each drug hoping that the generic firm will not be able to successfully challenge all of the patents and that the continued validity of just one of them will prevent generic entry. Evergreening inevitably results in patents of different strengths. Generics have responded to this strategy by challenging only the weaker patents on a drug and then filing for a stay of the subsequent patent infringement lawsuit until the strong patents are about to expire — which is often many years in the future. Generics seek these stays because an early litigation victory would grant a period of exclusivity that they could not use because the strong patents continue to block generic entry. Brand name firms should also favor stays because by delaying the generic’s exclusivity period, the stay also ultimately delays full competition. Yet in two out of three cases, the brand name firm opposed the stay motion. Courts are split on whether to grant the motions but have not addressed the anticompetitive consequences of stays. This Note explores the cases, regulatory background, and economic incentives surrounding the stays and concludes that stay motions should be denied.
Keywords: Hatch-Waxman, patent, pharmaceutical competition, drugs, pay for delay, stays, antitrust, patent, pharmaceutical, regulation, reverse payment, settlement, Sherman Act, exclusion payment, generic drugs, paragraph IV
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