Tuesday, April 26, 2011

Earning Exclusivity: Generic Drug Incentives and the Hatch-Waxman Act

Posted by D. Daniel Sokol

C. Scott Hemphill, Columbia University - Law School and Mark A. Lemley, Stanford Law School have an interesting new piece on Earning Exclusivity: Generic Drug Incentives and the Hatch-Waxman Act.

ABSTRACT: “Reverse” or “exclusion” payments to settle pharmaceutical patent lawsuits are facilitated because the Hatch-Waxman Act has been interpreted to give 180 days of generic exclusivity to the first generic company to file for FDA approval, whether or not that company succeeds in invalidating the patent or finding a way to avoid infringement. As a result, the patentee can “buy off” the first generic entrant, paying them to delay their entry into the market while still offering them the valuable period of generic exclusivity. And if that first generic is entitled to its 180 days, no one else can enter until after the exclusivity period has expired or been forfeited. The result is that the 180-day exclusivity period is not serving its purpose of eliminating weak patents. True, it is encouraging lots of challenges to those patents. But it is encouraging the challengers to accept compensation to drop those challenges, rather than taking them to judgment and benefiting the rest of the world.


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