Pharmaceutical Patents, Settlements, "Reverse Payments," and Exclusion

Posted by D. Daniel Sokol

John P. Bigelow (Princeton Economics Group) discusses Pharmaceutical Patents, Settlements, "Reverse Payments," and Exclusion.

ABSTRACT: Cases involving pharmaceuticals settlements to patent litigation with so called "reverse payments" or, as the FTC now prefers to call them, "exclusion payments" have been a source of controversy for some time. The FTC has been fighting these agreements since 2000 on the antitrust grounds that they are agreements between horizontal competitors not to compete. Although the FTC had some early successes, the issue is likely to be an increasing source of frustration to the commission as the trend in appellate decisions has turned against them. The most recent rebuke came in April in the Eleventh Circuit's decision in the Androgel case, where the court articulated (or rearticulated) a rule that protects these settlements from challenge so long as the terms of the settlement are confined to the nominal life of the patent.