Three Challenges for Pharmaceutical Antitrust
25 Pages Posted: 27 Mar 2019 Last revised: 23 Feb 2020
Date Written: March 24, 2019
Pharmaceutical antitrust law is hard. When drug companies delay generic entry, is that beneficial “life-cycle management”? Or is it unjustified anti-competitive behavior? The question arises in multiple settings, including patent settlements by which brand firms pay generics to delay entering the market, product reformulations made to prevent generic adoption, citizen petitions filed with the U.S. Food and Drug Administration (FDA), and the denial of samples generics need to enter the market.
Courts confront challenges when addressing these complex questions. And sometimes, they veer astray. Why? This essay seeks to answer that question, cataloging three mistakes courts have made in this setting, which are based on (1) complexity, (2) simplicity, and (3) Sisyphus.
The first category emphasizes the unique complexity of the pharmaceutical industry. The second points out how courts have prioritized simplicity in the areas of pay-for-delay settlements (based on the policy favoring settlement and presumptive validity of patents) and “product hopping” (based on the number of products on the market and size of the generic).
The third category then analogizes the challenge to the mythological figure Sisyphus, who labored to push a boulder uphill, with any progress in inching the boulder up quickly followed by the boulder rolling back downhill. I highlight eight hurdles that tempt courts to let the boulder roll downhill when they are confronted with arguments taking the form of safety, product liability, immunity, innovation, the scope of the patent, risk aversion, patent validity, and assisting rivals.
Keywords: pharmaceuticals, drugs, antitrust, settlements, product hopping, citizen petitions, sample denials, REMS
JEL Classification: I18, K21, L40, L41, L43, L65, O34, O38
Suggested Citation: Suggested Citation