Unsettling drug patent settlements: A framework for presumptive illegality

Michigan Law Review

Volumn 108, Issue 1, 2009, Pages 37-80

  Carrier, Michael A ^a  

^a Philosophy Department   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

DRUG; GENERIC DRUG;

DRUG COST; DRUG INDUSTRY; DRUG LEGISLATION; ECONOMIC ASPECT; ECONOMICS; FINANCIAL MANAGEMENT; FORECASTING; GOVERNMENT; HUMAN; INTERPERSONAL COMMUNICATION; LAW; LEGAL ASPECT; PATENT; REVIEW; UNITED STATES;

ANTITRUST LAWS; DRUG COSTS; DRUG INDUSTRY; DRUGS, GENERIC; ECONOMIC COMPETITION; FORECASTING; HUMANS; LEGISLATION, DRUG; MARKETING OF HEALTH SERVICES; NEGOTIATING; PATENTS AS TOPIC; PHARMACEUTICAL PREPARATIONS; UNITED STATES; UNITED STATES FEDERAL TRADE COMMISSION;

EID: 71949088939     PISSN: 00262234     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (351)

1. 540 U.S. 398 (2004).
2. Eduardo Porter, Japanese Cars, American Retirees; Makers Put Health and Pension Burdens Squarely on the Workers, N.Y TIMES, May 19, 2006, at C1.
3. See generally Jon Leibowitz, Comm'r, Fed. Trade Comm'n, Prepared Statement Before S. Comm. on the Judiciary, Anticompetitive Patent Settlements in the Pharmaceutical Industry: The Benefits of a Legislative Solution, at 1, Jan. 17, 2007, http://www.ftc.gov/speeches/leibowitz/071701oralstatement.pdf.
4. See infra notes 83-94 and accompanying text.
5. Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No.98-417, 98 Stat. 1585 (codified as amended at 21 U.S.C. § 355 (2006)).
6. See infra Part II.
7. See infra note 194 and accompanying text.
8. Generic Pharmaceuticals: Marketplace Access and Consumer Issues: Hearing Before the S. Comm. on Commerce, Science, & Transportation, 107th Cong. 61 (2002) (statement of Kathleen D. Jaeger, President and CEO, Generic Pharm. Ass'n), available at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname= 107-senate-hearings&docid=f:90155.pdf.
9. See generally Jon Leibowitz, Comm'r, Fed. Trade Comm'n, Prepared Statement Before the S. Spec. Comm. on Aging, Barriers to Generic Entry, at 10, July 20, 2006
10. [hereinafter Barriers to Generic Entry], http://www.ftc.gov/os/2006/07/ P052103BarrierstoGenericEntryTestimonySenate07202006.pdf .
11. See infra Part II.
12. Commentators also have offered more deferential approaches. For example, some scholars have advocated treatment under the Rule of Reason (by which courts consider an agreement's anticompetitive and procompetitive effects) because of conceivable reasons why settlements might not occur without payment from the brand to the generic firm.
13. See infra notes 254-264 and accompanying text.
14. 540 U.S. 398 (2004).
15. Michael A. Carrier, Resolving the Patent-Antitrust Paradox Through Tripartite Innovation, 56 VAND. L. REV. 1047, 1049-1050 (2003).
16. Id. at 1050-1053
17. Preserve Access to Affordable Generics Act, S. 369, 11 lth Cong. § 29(a) (2009).
18. Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No.98-417, 98 Stat. 1585 (codified as amended at 21 U.S.C. § 355 (2006)).
19. The Act was originally called the Waxman-Hatch Act. Kevin J. McGough, Preserving the Compromise: The Plain Meaning of Waxman-Hatch Market Exclusivity, 45 FOOD DRUG COSM. L.J. 487, 487 (1990).
20. FDA.gov http://FDA.gov, Generic Drugs: Questions and Answers, http://www.fda.gov/buyonlineguide/generics-q&a.htm (last visited May 18, 2009).
21. See CONG. BUDGET OFFICE, HOW INCREASED COMPETITION FROM GENERIC DRUGS HAS AFFECTED PRICES AND RETURNS IN THE PHARMACEUTICAL INDUSTRY 38 (1998)
22. [hereinafter CBO STUDY].
23. H.R. Rep. No.98-857, pt. 1, at 17 (1984),
24. reprinted in 1984 U.S.C.C.A.N. 2647, 2650.
25. H.R. REP. NO.98-857, pt. 2, at 4 (1984),
26. reprintedin 1984 U.S.C.C.A.N. 2686, 2688.
27. 130 CONG. REC. 24427 (1984) (statement of Rep. Waxman).
28. See infra notes 83-87 and accompanying text.
29. 130 CONG. REC. 24427 (statement of Rep. Waxman).
30. 733 F.2d 858 (Fed. Cir. 1984).
31. Id. at 863.
32. Id.
33. 35 U.S.C. § 271(e)(1)(2006).
34. In 2005, the Supreme Court broadly interpreted the exception, finding that it covered activities that did not ultimately lead to information included in an FDA submission. Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 207 (2005).
35. Elizabeth Stotland Weiswasser & Scott D. Danzis, The Hatch-Waxman Act: History, Structure, and Legacy, 71 ANTITRUST L.J. 585, 589-590 (2003).
36. See infra Section I.B.
37. See infra notes 61-62 and accompanying text.
38. Stephanie Greene, A Prescription for Change: How the Medicare Act Revises HatchWaxman to Speed Market Entry of Generic Drugs, 30 J. CORP. L. 309, 313 (2005).
39. Weiswasser & Danzis, supra note 26, at 588.
40. Id.
41. Maureen S. May et al., New drug development during and after a period of regulatory change: Clinical research activity of major United States pharmaceutical firms, 1958 to 1979, 33 CLINICAL PHARMACOLOGY THERAPEUTICS 691, 691 (1983).
42. John R. Virts & J. Fred Weston, Returns to Research and Development in the U.S. Pharmaceutical Industry, 1 MANAGERIAL & DECISION ECON. 103, 110 (1980).
43. JOHN W. EGAN ET AL., ECONOMICS OF THE PHARMACEUTICAL INDUSTRY 105-06 (1982);
44. see James J. Wheaton, Generic Competition and Pharmaceutical Innovation: The Drug Price Competition and Patent Term Restoration Act of 1984, 35 CATH. U. L. REV. 433, 450 (1986).
45. Wheaton, supra note 34, at 451-452
46. Id.
47. 35 U.S.C. §156(c), (g)(6) (2006).
48. See generally Weiswasser & Danzis, supra note 26, at 591.
49. 21 U.S.C. §355(j)(5)(F)(ii) (2006). The exclusivity period is four years for generic filers certifying patent invalidity or noninfringement and five years for other generic failures.
50. Id.
51. See JOHN R. THOMAS, PHARMACEUTICAL PATENT LAW 350 (2005). As described more fully below, other factors (including the brand firm's automatic stay and litigation) increase the delay.
52. See infra notes 55-58 and accompanying text; infra Part II.
53. 21 U.S.C. § 355(c)(3)(E)(iii).
54. 35 U.S.C. § 156(c), (g)(6) (2006).
55. See generally Weiswasser & Danzis, supra note 26, at 591.
56. See Elizabeth H. Dickinson, FDA's Role in Making Exclusivity Determinations, 54 FOOD & DRUG L.J. 195, 201(1999).
57. FED. TRADE COMM'N, GENERIC DRUG ENTRY PRIOR TO PATENT EXPIRATION: AN FTC STUDY 42 (2002)
58. [hereinafter GENERIC DRUG STUDY], available at http://www.ftc.gov/os/ 2002/07/genericdrugstudy.pdf.
59. 130 CONG. REC. 24425 (1984) (statement of Rep. Waxman).
60. H.R. REP. NO.98-857, pt. 1, at 28 (1984),
61. reprinted in 1984 U.S.C.C.A.N. 2647, 2661.
62. H.R. REP. NO.98-857, pt. 2, at 30 (1984),
63. reprinted in 1984 U.S.C.C.A.N. 2686, 2714.
64. Alfred B. Engelberg, Special Patent Provisions for Pharmaceuticals: Have They Outlived Their Usefulness?, 39 IDEA 389, 406 (1999).
65. GENERIC DRUG STUDY, supra note 43, at 5;
66. THOMAS, supra note 39, at 306.
67. GENERIC DRUG STUDY, supra note 43, at 5.
68. Id.
69. THOMAS, supra note 39, at 15.
70. The technical name is "Approved Drug Products with Therapeutic Equivalence Evaluations." ELECTRONIC ORANGE BOOK (2009), http://www.fda.gov/cder/ob/.
71. THOMAS, supra note 39, at 327.
72. 21 U.S.C. § 355(j)(2)(A)(vii) (200).
73. See generally THOMAS, supra note 39, at 313.
74. 21 U.S.C. § 355(j)(2)(B)(ii)-(iii). The 20-day limit was added in the 2003 amendments to the Act.
75. Erika Lietzan & David E. Korn, Issues in the Interpretation of 180-Day Exclusivity, 62 FOOD & DRUG L.J. 49, 54 (2007).
76. 21 U.S.C. § 355(j)(2)(B)(iv)(II).
77. Id. § 355(j)(5)(B)(iii).
78. Id.
79. The period could extend an additional twelve months depending on when the generic filed its paragraph IV certification. Id. § 355(j)(5)(F)(ii).
80. See C. Scott Hemphill, Paying for Delay: Pharmaceutical Patent Settlement as a Regulatory Design Problem, 81 N.Y.U. L. REV. 1553, 1566 n.50 (2006).
81. GENERIC DRUG STUDY, supra note 43, at 39.
82. 35 U.S.C. § 271(e)(2)(A) (2006);
83. see Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661 (1990).
84. 21 U.S.C. § 355(j)(5)(B)(iv).
85. Multiple applicants that file paragraph IV ANDAs on the same day share exclusivity. See, e.g., Lietzan & Korn, supra note 55, at 55.
86. GENERIC DRUG STUDY, supra note 43, at 7.
87. Until amended in 2003, the Hatch-Waxman Act included as a second trigger for the 180-day period a court decision finding invalidity or lack of infringement.
88. See Lietzan & Korn, supra note 55, at 63.
89. Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No.108-173, 117 Stat. 2066 (codified as amended in scattered sections of 21, 26, and 42 U.S.C).
90. H.R. CONF. REP. NO.108-391, at 835 (2003),
91. reprinted in 2003 U.S.C.C.A.N. 1808, 2187.
92. GENERIC DRUG STUDY, supra note 43, at 51.
93. 21 U.S.C. § 355(j)(5)(B)(iii).
94. CTR. FOR DRUG EVAL. & RESEARCH, FDA, GUIDANCE FOR INDUSTRY: LISTED DRUGS, 30-MONTH STAYS, AND APPROVAL OF ANDAS AND 505(B)(2) APPLICATIONS UNDER HATCHWAXMAN, AS AMENDED BY THE MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND MODERNIZATION ACT OF 2003 8-9 (2004), available at http://www.fda.gov/cder/ guidance/6174dft.pdf.
95. 21 U.S.C. § 355(j)(5)(D)(i).
96. Id. § 355(j)(5)(D)(i)(I) (referring to "decision from which no appeal (other than a petition to the Supreme Court for a writ of certiorari) has been or can be taken that the patent is invalid or not infringed");
97. see also Erica N. Andersen, Note, Schering the Market: Analyzing the Debate over Reverse-Payment Settlements in the Wake of the Medicare Modernization Act of 2003 and In re Tamoxifen Citrate Litigation, 93 IOWA L. REV. 1015, 1023-24 (2008);
98. Leibowitz, supra note 2.
99. The forfeiture provisions apply only to ANDAs filed after December 8, 2003 for which no paragraph IV certifications were filed before the December 8 date.
100. Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-173, § 1102(b), 117 Stat. 2066, 2460 (codified as amended in scattered sections of 21, 26 and 42 U.S.C).
101. Teva Pharms. USA, Inc. v. Novartis Pharms. Corp., 482 F.3d 1330, 1344 (Fed. Cir. 2007).
102. Medicare Modernization Act, §§ 1112-1113.
103. 146 CONG. REC. E1538 (daily ed. Sept. 20, 2000) (statement of Rep. Waxman).
104. S. REP. NO.107-167, at 4 (2002).
105. See Kathleen D. Jaeger, President & CEO, Generic Pharm. Ass'n, Testimony Before the H.R. Comm. on Energy and Commerce, Oct. 9, 2002, available at http://www.gphaonline.org/resources/2002/10/08/greater-access-affordable- pharmaceuticals-act.
106. See Press Release, Generic Pharm Ass'n, GPhA Says New Study Shows that Hatch-Waxman is a Successful Model for Biogenerics Legislation Exclusivity Provisions Similar to Those in Hatch-Waxman Would Promote Competition and Innovation (Sept. 17, 2008), http://www.gphaonline.org/media/press-releases/ 2009/02/12/gpha-says-new-study-shows-hatch-waxman-successful-model-biogenerics.
107. CBO STUDY, supra note 16, at 37.
108. Id. at xiii (44 percent);
109. DOUG LONG, LMS, 2003 YEAR IN REVIEW: TRENDS, ISSUES, FORECASTS 35 (2004), available at http://piapr.com/presentaciones/DougLong2003YIR Presentation.pdf (75 percent).
110. Alden F. Abbott & Suzanne T Michel, The Right Balance of Competition Policy and Intellectual Property Law: A Perspective on Settlements of Pharmaceutical Patent Litigation, 46 IDEA 1, 23 (2005).
111. Id. at 23-24.
112. See In re Schering-Plough Corp., 136 F.T.C 956, 985 (2003),
113. vacated, Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1058 (11th Cir. 2005).
114. CBO STUDY, supranote 16, at 38.
115. Jon Leibowitz, FTC Chairman, "Pay-for-Delay" Settlements in the Pharmaceutical Industry: How Congress Can Stop Anticompetitive Conduct, Protect Consumers ' Wallets, and Help Pay for Health Care Reform (The $35 Billion Solution), June 23, 2009, at 8, http://www.ftc.gov/speeches/leibowitz/ 090623payfordelayspeech.pdf.
116. See id. at xiii;
117. CTR. FOR DRUG EVAL. & RESEARCH, FDA, GENERIC COMPETITION AND DRUG PRICES (2006), http://www.fda.gov/CDER/ogd/generic-competition.htm.
118. See CBO STUDY, supra note 16, at xiii.
119. See id.
120. CTR. FOR DRUG EVAL. & RESEARCH, FDA, SAVINGS FROM GENERIC DRUGS PURCHASED AT RETAIL PHARMACIES (2004), http://www.fda.gov/cder/consumerinfo/ savingsfromgenericdrugs.htm.
121. Engelberg, supra note 47, at 426.
122. CBO STUDY, supra note 16, at 39.
123. The post-Hatch-Waxman term is based on drugs approved between 1992 and 1995 that received an extension.
124. U.S. GOV'T ACCOUNTABILITY OFFICE, PRESCRIPTION DRUGS: PRICE TRENDS FOR FREQUENTLY USED BRAND AND GENERIC DRUGS FROM 2000 THROUGH 2004 1 (2005).
125. FAMILIES USA, COST OVERDOSE: GROWTH IN DRUG SPENDING FOR THE ELDERLY, 1992-2010 2 (2000), available at http://www.familiesusa.org/assets/pdfs/ drugod852b.pdf.
126. U.S. GOV'T ACCOUNTABILITY OFFICE, PRESCRIPTION DRUGS: PRICE TRENDS FOR FREQUENTLY USED BRAND AND GENERIC DRUGS FROM 2000 THROUGH 2004 4, 10 (2005).
127. Motion and Brief for Representative Henry A. Waxman as Amicus Curiae Supporting Petitioner at *2, 4, FTC v. Schering-Plough Corp., 548 U.S. 919 (2006) (No.05-273), 2005 WL 2462026 (Waxman brief) (noting that brand-name drugs "account for most of the increase in drug costs").
128. See infra notes 248-253 and accompanying text.
129. Waxman brief, supra note 92, at *v.
130. Id.;
131. see also, e.g., Sheryl Gay Stolberg & Jeff Gerth, Keeping Down the Competition; How Companies Stall Generics And Keep Themselves Healthy, N. Y. TIMES, July 23, 2000, § 1, at 1.
132. 148 CONG. REC. S7566 (daily ed. July 30, 2002) (statement of Sen. Hatch).
133. 332 F.3d 896 (6th Cir. 2003).
134. The facts are taken from id at 899-903.
135. Andrx also could market its generic version if it entered into a license agreement with Hoechst or if Hoechst entered into a license agreement with a third party. Id. at 902.
136. The $100 million payment also would be made if Hoechst dismissed the infringement case or failed to refile the case after a court ruling that did not determine issues of validity, enforcement, or infringement.
137. Id. at 903.
138. Id. at 907.
139. Id.
140. Id. at 908.
141. Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1058 (11th Cir. 2005), cert, denied, 548 U.S. 919 (2006). The facts are taken from the opinion.
142. See id. at 1058-1062
143. Petition for Writ of Certiorari at 8, FTC v. Schering-Plough Corp. et al., 548 U.S. 919 (2006) (No.05-273)
144. [hereinafter FTC Cert Petition].
145. Schering-Plough, 402 F.3d at 1061-1062
146. In re Schering-Plough Corp., 136 F.T.C. 956, 1060-1061 (2003).
147. Id. at 967.
148. Id. at 1038.
149. Id. at 1019.
150. Id. at 1037.
151. Id. at 1043.
152. Id. at 1051.
153. Id. at 1052.
154. Id. at 1062 (internal quotation marks omitted).
155. Id. at 987, 1062.
156. Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1065 (11th Cir. 2005),
157. cert, denied, 548 U.S. 919 (2006).
158. Id. at 1065-1066
159. Id. at 1066.
160. Id.
161. Id. at 1068.
162. Id. at 1069.
163. Id. at 1071.
164. Id. at 1072.
165. Id.
166. Id. at 1074
167. (quoting In re Ciprofloxacin Hydrochloride Antitrust Litig., 261 F. Supp. 2d 188, 251 (E.D.N.Y 2003)).
168. Id. at 1075.
169. Id. at 1076.
170. Id.
171. Christopher M. Holman, Do Reverse Payment Settlements Violate the Antitrust Laws?, 23 SANTA CLARA COMPUTER & HIGH TECH. L.J. 489, 491 (2007).
172. Brief for the United States as Amicus Curiae Supporting Respondents' Opposition to Petition for Writ of Certiorari at 11, FTC v. Schering-Plough Corp. et al., 548 U.S. 919 (2006) (No.05-273).
173. In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 193 (2d Cir. 2006). The facts are taken from the opinion.
174. See id. at 193-199
175. Imperial Chem. Indus, v. Barr Labs., 795 F. Supp. 619, 622 (S.D.N.Y 1992).
176. 466 F.3d at 197
177. (quoting In re Tamoxifen Citrate Antitrust Litig., 277 F. Supp. 2d 121, 133 (E.D.N.Y 2003)).
178. Hemphill, supra note 58, at 1584-1586
179. 466F.3dat211.
180. Id.
181. Id. at 208.
182. Id.
183. Id. at 208-209
184. Id. at 213.
185. Id. at 214.
186. Id.
187. Id. at 215.
188. Id. at 216.
189. Id. at 224 (Pooler, J., dissenting).
190. Id. at 225-226 (Pooler, J., dissenting).
191. Id. at 226 (Pooler, J., dissenting).
192. Id. at 228 (Pooler, J., dissenting).
193. Id. at 232 (Pooler, J., dissenting).
194. In re Ciprofloxacin Hydrochloride Antitrust Litig., 544 F.3d 1323 (Fed. Cir. 2008).
195. The facts are taken from id. at 1327-30.
196. See also In re Ciprofloxacin Hydrochloride Antitrust Litig., 363 F. Supp. 2d 514, 518-519 (E.D.N.Y. 2005).
197. See 363 F. Supp. 2d at 523-541
198. 544 F.3d at 1332-1333
199. Id. at 1337.
200. Id. at 1333.
201. Id. at 1333 n.11.
202. Id. at 1334.
203. Id. at 1336.
204. Id.
205. See Hemphill, supra note 58, at 1614.
206. See In re Schering-Plough Corp., 36 F.T.C 956, 999-1003 (2003),
207. vacated, ScheringPlough Corp. v. FTC, 402 F.3d 1056, 1058 (11th Cir. 2005);
208. U.S. DEP'T OF JUSTICE & FED. TRADE COMM'N, ANTITRUST GUIDELINES FOR THE LICENSING OF INTELLECTUAL PROPERTY ¶ 2.3 (1995).
209. In 2007, in patent cases with more than $25 million at risk, each party faced a median expense of $5 million. AM. INTELLECTUAL PROP. LAW ASS'N, REPORT OF THE ECONOMIC SURVEY 2007 25 (2007).
210. In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 202 (2d Cir. 2006) (citation omitted).
211. Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1072 (11th Cir. 2005),
212. cert, denied, 548 U.S. 919 (2006).
213. Engelberg, supra note 47, at 423.
214. FTC Cert Petition, supra note 105, at 4.
215. See supra notes 72-73 and accompanying text.
216. 466F.3dat203.
217. 344 F.3d 1294 (11th Cir. 2003).
218. Id. at 1308.
219. In re Ciprofloxacin Hydrochloride Antitrust Litig., 261 F. Supp. 2d 188, 256 (E.D.N.Y. 2003).
220. Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1075 (11th Cir. 2005),
221. cert, denied, 548 U.S. 919 (2006).
222. 35 U.S.C. § 282 (2006).
223. Courts apply the same patentability requirements-subject matter, novelty, utility, nonobviousness, and enablement-in determining validity that the PTO applies in initially determining whether to grant a patent.
224. See id. §§ 101, 102, 103, 112(2006).
225. In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 211 (2d Cir. 2006).
226. 402 F.3d at 1066-1067
227. In re Ciprofloxacin Hydrochloride Antitrust Litig., 544 F.3d 1323, 1337 (Fed. Cir. 2008).
228. Carl Shapiro, Antitrust Limits to Patent Settlements, 34 RAND J. ECON. 391, 395 (2003);
229. see also Cristofer Leffler & Keith Leffler, Settling the Controversy Over Patent Settlements: Payments by the Patent Holder Should Be Per Se Illegal, 21 RES. L. & ECON. 475, 484 tbl.4 (2004).
230. Mark A. Lemley & Carl Shapiro, Probabilistic Patents, 19 J. ECON. PERSP. 75, 75 (2005).
231. See generally Steven W Day, Note, Leaving Room for Innovation: Rejecting the FTC's Stance Against Reverse Payments in Schering-Plough v. FTC, 57 CASE W. RES. L. REV. 223, 233-36 (2006).
232. Shapiro, supra note 178, at 396.
233. In re Ciprofloxacin Hydrochloride Antitrust Litig., 363 F. Supp. 2d 514, 533 (E.D.N.Y. 2005).
234. Id. at 541.
235. Id. at 533.
236. Id. at 531.
237. Id. at 532.
238. Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1534 (Fed. Cir. 1983).
239. New Eng. Braiding Co. v. A.W Chesterton Co., 970 F.2d 878, 882 (Fed. Cir. 1992);
240. see Hemphill, supra note 58, at 1602 n.181.
241. Corrected Brief for 28 Professors of Law, Business, and Economics as Amici Curiae Supporting Appellants at 12, In re Ciprofloxacin Hydrochloride Antitrust Litig., 544 F.3d 1323 (Fed. Cir. 2008) (No.2008-1097).
242. Id.
243. See Medlmmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007);
244. Aronson v. Quick Point Pencil Co., 440 U.S. 257, 264 (1979);
245. United States v. Glaxo Group, Ltd., 410 U.S. 52, 57 (1973);
246. Lear, Inc. v. Adkins, 395 U.S. 653, 670 (1969).
247. John R. Allison & Mark A. Lemley, Empirical Evidence on the Validity of Litigated Patents, 26 AIPLA Q.J. 185, 205 (1998) (survey limited to cases resulting in a final judgment of validity).
248. Kimberly A. Moore, Judges, Juries, and Patent Cases-An Empirical Peek Inside the Black Box, 99 MICH. L. REV. 365, 385 (2000).
249. Patstats.org, Univ. of Houston Law Ctr. Decisions for 2000-2004, Issue Codes 1-16, 23, 24, http://www.patstats.org/Composite%20Table%20(2000-2004).html (last visited May 18, 2009).
250. GENERIC DRUG STUDY, supra note 43, at 10, 16.
251. Paul M. Janicke & LiLan Ren, Who Wins Patent Infringement Cases?, 34 AIPLA Q.J. 1, 20 (2006).
252. GENERIC DRUG STUDY, supra note 43, at 14.
253. Id.
254. Id. at 10-11.
255. See generally Stephanie Greene, A Prescription for Change: How the Medicare Act Revises Hatch-Waxman to Speed Market Entry of Generic Drugs, 30 J. CORP. L. 309, 331 (2005).
256. Corrected Brief for Federal Trade Commission as Amicus Curiae Supporting Appellants at 9, In re Ciprofloxacin Hydrochloride Antitrust Litig., 544 F.3d 1323 (Fed. Cir. 2008) (No.2008-1097).
257. In re Ciprofloxacin, 544 F.3d at 1336.
258. Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1072 (11th Cir. 2005),
259. cert, denied, 548 U.S. 919 (2006).
260. In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 213 (2d Cir. 2006).
261. Valley Drug Co. v. Geneva Pharms., Inc., 344 F.3d 1294, 1307 (11th Cir. 2003).
262. Andersen, supra note 69, at 1054-1055
263. 402 F.3d at 1074.
264. 466 F.3d at 206.
265. In re Ciprofloxacin Hydrochloride Antitrust Litig., 544 F.3d 1323, 1333 n.11 (Fed. Cir. 2008).
266. See Herbert Hovenkamp et al., Anticompetitive Settlement of Intellectual Property Disputes, 87 MINN. L. REV. 1719, 1758 (2003).
267. See, e.g., id.;
268. Hemphill, supra note 58;
269. Shapiro, supra note 178.
270. Pursuant to the Rule of Reason, courts consider an agreement's anticompetitive and procompetitive effects. In the initial stage of analysis, a plaintiff must demonstrate an anticompetitive effect, typically by showing a defendant's market power. In most cases, plaintiffs cannot make this showing. See Michael A. Carrier, The Real Rule of Reason: Bridging the Disconnect, 1999 B. YU. L. REV. 1265, 1268 (finding that courts dismissed 84 percent of Rule-of-Reason cases on the grounds that the plaintiff could not show a significant anticompetitive effect).
271. Courts apply per se treatment-essentially invalidating an agreement once its existence is shown - to price fixing, bid rigging, and market-allocation agreements, all of which are likely to lead to competitive harm and unlikely to offer benefits. See MICHAEL A. CARRIER, INNOVATION FOR THE 21ST CENTURY: HARNESSING THE POWER OF INTELLECTUAL PROPERTY AND ANTITRUST LAW 56 (2009).
272. 540 U.S. 398 (2004).
273. See generally Michael A. Carrier, Of Trinko, Tea Leaves, and Intellectual Property, 31 J. CORP. L. 357 (2006).
274. Trinko, 540 U.S. at 412.
275. Id.
276. Id.
277. Id. at 411.
278. Id.
279. (quoting United States v. Citizens & S. Nat'l Bank, 422 U.S. 86, 91 (1975)).
280. Id.
281. 127 S. Ct. 2383, 2387 (2007).
282. Id. at 2397.
283. Id. at 2393.
284. Id. at 2394.
285. A contrary position might show less concern with an ineffective regulatory regime, as such a regime could reflect a deliberate underenforcement strategy rather than a need for antitrust oversight. See Philip J. Weiser, The Relationship of Antitrust and Regulation in a Deregulatory Era 21 (U. Colo. Legal Research Paper Series, Paper No. 06-19, 2006), available at http://papers.ssrn.com/sol3/papers.cfm?abstract-id=814945.
286. But deliberate underenforcement does not appear likely in the Hatch-Waxman context, as revealed by the drafters' hostile reactions to reversepayment settlements.
287. 540 U.S. 398, 412 (2004).
288. See id. at 412-14.
289. Even if the effectiveness of the telecommunications regime was weaker than the Court anticipated, at least the regulators were engaging in some actions that promoted competition. Carrier, supra note 213, at 369-370
290. 127 S. Ct. at 2393.
291. See Hemphill, supra note 58, at 1615;
292. Herbert Hovenkamp, Sensible Antitrust Rules for Pharmaceutical Competition, 39 U.S.F. L. REV. 11, 19 (2004).
293. United States v. Topeo Assoes., Inc., 405 U.S. 596, 608 (1972).
294. ABA SECTION OF ANTITRUST LAW, ANTITRUST LAW DEVELOPMENTS 103 (6th ed. 2007).
295. 498 U.S. 46 (1990) (per curiam).
296. Id. at 49-50.
297. In re Schering-Plough Corp., 136 F.T.C 956, 968-74 (2003),
298. vacated, Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1058 (11th Cir. 2005).
299. United States v. Microsoft Corp., 253 F.3d 34, 79 (D.C Cir. 2001) (en banc).
300. HERBERT HOVENKAMP, ANTITRUST LAW: AN ANALYSIS OF ANTITRUST PRINCIPLES AND THEIR APPLICATION ¶ 2030b, at 213 (2d ed. 2005) 12.
301. Brief for American Antitrust Institute as Amicus Curiae Supporting Petitioners at 8, In re Tamoxifen Citrate Antitrust Litig., 127 S. Ct. 3001 (No.06-830).
302. Thomas Rice & Karen Y Matsuoka, The Impact of Cost-Sharing on Appropriate Utilization and Health Status: A Review of the Literature on Seniors, 61 MED. CARE RES. & REV. 415, 420, 427-428 (2004).
303. In re Schering-Plough, 136 ETC. at 992-999
304. Hemphill, supra note 58, at 1586.
305. Thomas B. Leary, Antitrust Issues in the Settlement of Pharmaceutical Patent Disputes, Part III, 30 SEATTLE U. L. REV. 377, 381 (2007).
306. E.g., Hovenkamp et al., supra note 208, at 1762.
307. Hemphill, supra note 58, at 1593.
308. HERBERT HOVENKAMP, THE ANTITRUST ENTERPRISE: PRINCIPLE AND EXECUTION 24748 (2005).
309. E.g., Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y 1970).
310. See generally Mark A. Lemley & Carl Shapiro, Patent Holdup and Royalty Stacking, 85 TEX. L. REV. 1991, 2018-19 (2007).
311. In re Schering-Plough Corp., 36 ETC. 956, 1003-53,
312. vacated, Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1058 (11th Cir. 2005).
313. BUREAU OF COMPETITION, FTC, AGREEMENTS FILED WITH THE FEDERAL TRADE COMMISSION UNDER THE MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND MODERNIZATION ACT OF 2003: SUMMARY OF AGREEMENTS FILED IN FY 2005 4 (2006)
314. [hereinafter FY 2005 AGREEMENTS], available at http://www.ftc.gov/os/ 2006/04/fy2005drugsettlementsrpt.pdf.
315. Statement of Chairman Robert Pitofsky and Commissioners Sheila F. Anthony, Mozelle W Thompson, Orson Swindle, and Thomas B. Leary, 65 Fed. Reg. 17506 (April 3, 2000), available at http://www.ftc.gov/os/2000/03/ hoeschtandrxcommstmt.htm
316. FY 2005 AGREEMENTS, supra note 246, at 4.
317. BUREAU OF COMPETITION, FTC, AGREEMENTS FILED WITH THE FEDERAL TRADE COMMISSION UNDER THE MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND MODERNIZATION ACT OF 2003: SUMMARY OF AGREEMENTS FILED IN FY 2006 4 (2007)
318. [hereinafter FY 2006 AGREEMENTS], available at http://www.ftc.gov/ reports/mmact/MMAreport2006.pdf.
319. FY 2005 AGREEMENTS, supra note 246, at 4.
320. BUREAU OF COMPETITION, FTC, AGREEMENTS FILED WITH THE FEDERAL TRADE COMMISSION UNDER THE MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND MODERNIZATION ACT OF 2003: SUMMARY OF AGREEMENTS FILED IN FY 2007 3 (2008)
321. [hereinafter FY 2007 AGREEMENTS], available at http://www.ftc.gov/os/ 2008/05/mmaact.pdf.
322. Id. at 5 (11 of 16 agreements, or 69 percent);
323. FY 2006 AGREEMENTS, supra note 249, at 6 (9 of 11 agreements, or 82 percent).
324. FTC Cert Petition, supra note 105, at 18.
325. Robert D. Willig & John P. Bigelow, Antitrust Policy Toward Agreements that Settle Patent Litigation, 49 ANTITRUST BULL. 655, 660 (2004).
326. See Marc G. Schildkraut, Patent-Splitting Settlements and the Reverse Payment Fallacy, 71 ANTITRUST L.J. 1033, 1043 (2004).
327. Shapiro, supra note 178, at 407-408
328. The conclusion is slightly more nuanced since the brand also pays the generic's costs, which it would not otherwise have paid. Hemphill, supra note 58, at 1594-1595
329. Hovenkamp et al., supra note 208, at 1760 n.177.
330. Schildkraut, supra note 255, at 1059.
331. Id. at 1059-1063
332. Willig & Bigelow, supra note 254, at 660.
333. See id. at 661;
334. see also James Langenfeld & Wenqing Li, Intellectual Property and Agreements To Settle Patent Disputes: The Case of Settlement Agreements with Payments from Branded to Generic Manufacturers, 70 ANTITRUST L.J. 777, 796 (2003) (discussing situation of generic "hav[ing] private information on its ability to enter").
335. In re Schering-Plough Corp., 136 F.T.C 956, 1003-53 (2003),
336. vacated, Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1058 (11th Cir. 2005).
337. Leffler & Leffler, supra note 178, at 484.
338. Id.
339. Id.;
340. see also Reply Brief of Counsel Supporting Complaint at 31, In re Schering-Plough, 136 F.T.C. 956 (2003) (No.9297) (F.T.C. Oct. 24, 2002) (explaining that even if a procompetitive settlement is conceivable, the parties naturally prefer a range of anticompetitive settlements).
341. In re Schering-Plough, 136 F.T.C. at 963-966
342. Id. at 999-1003.
343. FY 2006 AGREEMENTS, supra note 249, at 4-5.
344. Id.
345. FY 2007 AGREEMENTS, supra note 251, at 2.
346. See generally C. Scott Hemphill, An Aggregate Approach to Antitrust: Using New Data and Agency Rules to Preserve Drug Competition, 109 COLUM. L. REV. 629 (2009).
347. FY 2006 AGREEMENTS, supra note 249, at 5.
348. Prepared Statement of the FTC Before the Comm. on the Judiciary of the U.S. Senate, Anticompetitive Patent Settlements in the Pharmaceutical Industry: The Benefits of a Legislative Solution, at 17 (Jan. 17, 2007), http://www.ftc.gov/speeches/leibowitz/070117anticompetitivepatentsettlements- senate.pdf.
349. C. Scott Hemphill, Drug Patent Settlements Between Rivals: A Survey 15 (2007), available at http://ssrn.com/abstract=969492.
350. For a recent attempt to do so, see the FTC's 2008 complaint against Cephalon, which alleged "side-term inducements" (such as licenses to IP, supply agreements, and codevelopment deals) to generics so they did not challenge its sleep-disorder drug Provigil. Complaint 156, FTC v. Cephalon, Inc., No.1:08-cv-00244-RMC (D.D.C Feb. 13, 2008).
351. Andersen, supra note 69, at 72-74.