Roberts Was Wrong: Increased Antitrust Scrutiny after FTC v. Actavis Has Accelerated Generic Competition

Abstract

In Federal Trade Commission v. Actavis, the Supreme Court ruled that reverse-payment settlements between pharmaceutical patent holders and generic manufacturers are subject to heightened antitrust scrutiny. In a vigorous dissent, Chief Justice John Roberts suggested that greater antitrust scrutiny may actually harm competition by discouraging generics from challenging pioneers’ patents in the first place. This Article finds that, contrary to Roberts’s prediction, the number of Paragraph IV challenges actually increased by twenty percent in the year following Actavis. To restore the incentive balance between pioneers and generics, this Article argues that the Federal Trade Commission should be required to prove patent invalidity before bringing an antitrust suit. This Article also urges the Federal Drug Administration to adopt more transparent disclosure policies, Congress to amend the Hatch-Waxman Act to include a “rolling exclusivity” procedure, and courts to adopt a more coherent framework for evaluating settlements between patentees and generic challengers.

Keywords: Federal Trade Commission, FTC, Actavis, Antitrust, Hatch-Waxman, Reverse Payment

JEL Classification: K21, K23