Citation
Reverse Payment Settlements In The Midst Of Actavis

Material Information

Title:
Reverse Payment Settlements In The Midst Of Actavis
Series Title:
19th Annual Undergraduate Research Symposium
Creator:
Harmer, Brooke
Language:
English
Physical Description:
Undetermined

Subjects

Subjects / Keywords:
Center for Undergraduate Research
Center for Undergraduate Research
Genre:
Conference papers and proceedings
Poster

Notes

Abstract:
There is a natural tension between the Patent Act, which confers legal monopolies on inventors, and the Sherman Act, which is intended to protect and promote competition. Following a threat of generic entry, pioneer firms often file patent infringement suits. In many instances, the suit is settled. Ordinarily, the defendant pays the victim in a suit. In many pharmaceutical cases, however, the patentee pays the prospective infringer, making the payment reversed. Antitrust challenges to reverse payment settlements have been confused due to a lack of Supreme Court guidance regarding this practice. In 2013, the Supreme Court did not fully embrace the opportunity for clarification and guidance in its FTC v. Actavis, INC. opinion. In the wake of this ambiguity, this paper serves to evaluate variations in settlement decisions and examine their economic consequences. Although policy suggestions are complicated, it was found that a close analysis of reverse payments deters firms from making suspicious payments. It is also found that the first generic that successfully defeats the patent owner should hold the 180-day exclusivity to reduce the incentive to settle. While these solutions will not fix all threats to competition in the pharmaceutical industry, it is a significant start. ( en )
General Note:
Research authors: Brooke Harmer - University of Florida
General Note:
University Scholars Program
General Note:
Faculty Mentor: There is a natural tension between the Patent Act, which confers legal monopolies on inventors, and the Sherman Act, which is intended to protect and promote competition. Following a threat of generic entry, pioneer firms often file patent infringement suits. In many instances, the suit is settled. Ordinarily, the defendant pays the victim in a suit. In many pharmaceutical cases, however, the patentee pays the prospective infringer, making the payment reversed. Antitrust challenges to reverse payment settlements have been confused due to a lack of Supreme Court guidance regarding this practice. In 2013, the Supreme Court did not fully embrace the opportunity for clarification and guidance in its FTC v. Actavis, INC. opinion. In the wake of this ambiguity, this paper serves to evaluate variations in settlement decisions and examine their economic consequences. Although policy suggestions are complicated, it was found that a close analysis of reverse payments deters firms from making suspicious payments. It is also found that the first generic that successfully defeats the patent owner should hold the 180-day exclusivity to reduce the incentive to settle. While these solutions will not fix all threats to competition in the pharmaceutical industry, it is a significant start. - Center for Undergraduate Research, University Scholars Program

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Source Institution:
University of Florida
Rights Management:
Copyright Brooke Harmer. Permission granted to University of Florida to digitize and display this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder.

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Reverse Payment Settlements in the Aftermath of Actavis Brooke Harmer and Dr. Roger Blair Department of Economics, University of Florida, Gainesville, FL Introduction Policy Suggestions Acknowledgements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he Problem I'"%"(5#($()$1>%$-(1")#5.)(@"1<"")(1'"( S$1")1(?&1($)*(1'"(F'"%0$)(?&18( T.--.<5)6($(1'%"$1(.=(6")"%5&(")1%7:( /5.)""%(=5%0#(.=1")(=5-"(/$1")1( 5)=%5)6"0")1(#>51#8(I'"#"(#>51#( 6")"%$--7(#"11-"(<51'(1'"(/$1")1""( /$75)6(1'"(5)=%5)6"%:(0$;5)6($(%","%#"*( /$70")18(U'"1'"%(.%().1(1'"#"( /$70")1#($%"(/%.1"&15)6(1'"(/$1")1(.%( '5)*"%5)6(&.0/"1515.)(5#(>)&-"$%8(I'5#( /%.A"&1(",$->$1"#(1'"(,$%5$15.)#(5)( #"11-"0")1#($)*("O$05)"#(1'"5%( "&.).05&(&.)#"V>")&"#8(( Future Work I'"%"(0>#1(@"($)($)$-7#5#(@"1<"")(1'"( @")"=51#(.=(1'"(KLMN*$7("O&->#5,517(/"%5.*( $)*(1'"(&.#1#(.=(1'"(/.1")15$-().N?Q( /%.05#"#8(?=1"%(50/-"0")15)6(#1%5&1"%( #"11-"0")1(/.-5&5"#:("=="&1#(.)(!3+($)*( &.0/"1515.)(0>#1(@"($)$-7P"*($#(<"--8( Generic Entry The Hatch-Waxman Act was created to give inventors greater incentive to invent by extending the patent life up to five years. It also allows for more rapid generic entry through the Abbreviated New Drug Application (ANDA). When filing an ANDA, the generic company must notify the pioneer brand and file a Paragraph IV certification stating that the patent it invalid or will not be infringed upon. In this time period, the pioneer company has 45 days to file a patent infringement suit. During these days, the FDA cannot grant entry until either the patent expires, a final judicial determination occurs, or 30 months pass before litigation is resolved. Frequently, patent suits will be filed in order to have more time in the market. When cases settle, there is generally a transfer of "something of large value," making reversed payments suspicious. !"#$%#&'$##($)$%#*&+"%,"-.&/01234$5$)6$-&/012& Source: European Commission, 7 th Patent Settlement Monitoring Exercise Settlements with a value transfer in both directions Settlements without a value transfer Settlements with a value transfer from the generic company to the originator Settlements with a value transfer from the originator company to the generic