Winning the War on Drug Prices: Analyzing Reverse Payment Settlements Through the Lens of Trinko

Alicia I. Hogges-Thomas

Volume 64, Issue 5, 1421-1447

As drug prices continue to rise, many Americans are forced to choose between buying food or medicine. In 1984, Congress sought to address this issue by enacting the Hatch- Waxman Act. The purpose of the Act was to increase the availability of generic drugs by enabling the generic companies to challenge the brand companies’ patents in litigation. But this purpose is frustrated when the brand companies pay the generic companies millions of dollars to settle the litigation and delay their market entry. These settlements, which are usually referred to as “pay-for-delay” or “reverse payment” settlements, benefit the pharmaceutical companies at the expense of consumers.Reverse payment settlements have been challenged under the antitrust laws. In the last decade, the circuit courts have developed three approaches to analyzing reverse payment settlements. None of the courts considered whether the patent was valid or infringed. Furthermore, because courts favor settlement, the prevailing analysis has resulted in absolutely no antitrust scrutiny of reverse payment settlements.Most recently, the Supreme Court granted a petition for certiorari in FTC v. Watson Pharmaceuticals, Inc. This Article argues that the Court’s decision should be guided by the principles in Verizon Communications v. Law Offices of Curtis V. Trinko. Those principles will lead the Court to consider the particular circumstances of the pharmaceutical industry and how the Hatch-Waxman Act affects competition in that industry. After considering these factors, the Court should conclude that the policy favoring settlement should not be considered in this antitrust analysis and that the courts should decide the merits of the underlying patent claim.

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