Pharmaceutical 'Pay-for-Delay' Reexamined: A Dwindling Practice or a Persistent Problem?

16 Pages Posted: 3 Oct 2019 Last revised: 21 Oct 2020

See all articles by Laura Karas

Laura Karas

Harvard University, Law School

Gerard F. Anderson

Johns Hopkins University - Department of Health Policy and Management; National Bureau of Economic Research (NBER)

Robin Feldman

UC Hastings Law

Date Written: September 23, 2019

Abstract

The Supreme Court ruled in FTC v. Actavis that a delay in generic entry may be anticompetitive when part of a patent settlement that includes a large and otherwise unjustified value transfer to the generic company, termed a reverse payment patent settlement, or “pay-for-delay.” Following Actavis, drug companies have limited the size of reverse payments and have fashioned settlement terms that include more discreet categories of compensation to generic companies. In light of the fact that such settlements retain the potential for anticompetitive effects, the apparent size of the reverse payment may no longer be a useful gauge of the legality of pay-for-delay deals. In this article, we argue that convoluted settlements in the post-Actavis landscape that camouflage value transfers from brand-name to generic companies necessitate a shift in the focus of antitrust scrutiny to the existence of any restriction on generic entry together with a category of patent less likely to survive a challenge. We conclude with a discussion of pay-for-delay bills in the 116th Congress and propose several reforms to deter pay-for-delay behavior.

Keywords: anticompetitive, pay-for-delay, patent settlement, reverse payment

Suggested Citation

Karas, Laura and Anderson, Gerard F. and Feldman, Robin, Pharmaceutical 'Pay-for-Delay' Reexamined: A Dwindling Practice or a Persistent Problem? (September 23, 2019). 71 Hastings L. J. 959 (2020), UC Hastings Research Paper No. 368, Available at SSRN: https://ssrn.com/abstract=3458552

Laura Karas

Harvard University, Law School ( email )

1563 Massachusetts Avenue
Cambridge, MA 02138
United States

Gerard F. Anderson

Johns Hopkins University - Department of Health Policy and Management ( email )

624 North Broadway
Baltimore, MD 21205

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Robin Feldman (Contact Author)

UC Hastings Law ( email )

200 McAllister Street
San Francisco, CA 94102
United States

HOME PAGE: http://https://www.uchastings.edu/people/robin-feldman/

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