Uncertainty and Reverse Payments

57 Pages Posted: 14 Apr 2016 Last revised: 26 Sep 2017

See all articles by Ramsi Woodcock

Ramsi Woodcock

University of Kentucky College of Law

Date Written: February 1, 2016

Abstract

The current approach to “reverse payment” settlements of drug patent litigation seeks to preclude only those settlements guaranteed to harm consumers, rather than all that could harm them. Antitrust tolerates the possibility of harm in order to give firms the freedom to make settlements that might benefit consumers, relative to what courts would achieve under patent law. Antitrust’s mission is not, however, to improve upon outcomes under patent law, but rather to prevent harm to consumers. Accordingly, antitrust must minimize the possibility of harm, even if that precludes the chance of gain. I show that a ban on all settlements that fix a date of entry, regardless of the existence of a reverse payment or the number of generic challengers, is the best way to do that.

Keywords: patent settlement, antitrust, monopolization, horizontal anticompetitive practices, drugs, pharmaceuticals, generic drug, litigation, settlement, consumer welfare, principle of insufficient reason

JEL Classification: L41, L65, O34, K41

Suggested Citation

Woodcock, Ramsi, Uncertainty and Reverse Payments (February 1, 2016). Tennessee Law Review, Vol. 84, 2016, Available at SSRN: https://ssrn.com/abstract=2763601 or http://dx.doi.org/10.2139/ssrn.2763601

Ramsi Woodcock (Contact Author)

University of Kentucky College of Law ( email )

620 S. Limestone Street
Lexington, KY 40506-0048
United States

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