Policy reversal on reverse payments: Why courts should not follow the new doj position on reverse-payment settlements of pharmaceutical patent litigation

Iowa Law Review

Volumn 96, Issue 1, 2010, Pages 57-125

  Butler, Henry N ^a   Jarosch, Jeffrey Paul ^b  

^a GEORGE MASON UNIVERSITY   (United States)

^b NORTHWESTERN UNIVERSITY   (United States)

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EID: 78651293692     PISSN: 00210552     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (328)

1. Reverse-payment settlements fit neatly with the parties' incentives. See infra Part II.A. This Article uses the term "reverse-payment settlement" because it is the most commonly used term for this type of settlements. The authors do not intend to imply that reverse payments are backwards or against the parties' interests; only that the payment goes in the opposite direction from the typical patent-infringement case. Some have criticized the "reverse payment" term as suggesting that the settlement is against the parties' interests or is in some way backwards. See Bret Dickey et al., An Economic Assessment of Patent Settlements in the Pharmaceutical Industry, 19 ANNALS HEALTH L. 367, 388 (2010).
2. We do not adopt diese terms because although some settlement payments may be in exchange for exclusion from the market, a reverse payment does not necessarily have that effect.
3. 15 U.S.C. § 1 (2006). The FTC challenges come under section 5 of the FTC Act. See, e.g., Schering-Plough Corp. v. FTC, 402 F.3d 1056 (11th Cir. 2005).
4. See, e.g., Schering-Plough Corp., Docket No. 9297 (F.T.C. June 27, 2002), http://www.ftc.gov/os/adjpro/d9297/020627id.pdf, rev'd, 136 F.T.C. 956 (2003), rev'd, 402 F.3d 1056 (11th Cir. 2005).
5. The substantive laws under which the FTC and the DOJ challenge reverse payments are similar. The FTC challenges reverse payments under the power granted by section 5 of the FTC Act. See 15 U.S.C. § 45 (2006) (allowing the FTC to prevent "unfair methods of competition"). The DOJ challenges reverse payments under section 1 of the Sherman Act. 15 U.S.C. § 1. Because of the Commission's bipartisan nature, it is less directly controlled by the President, so the DOJ and FTC positions have at times diverged.
6. E.g., Ark. Carpenters Health & Welfare Fund v. Bayer AG, 604 F.3d 98 (2d Cir.) (per curiam), reh'g en banc denied, Nos. 05-285l-cv(L), 05-2852-cv(CON), 05-2863-cv(CON), 2010 WL 3464382 (2d Cir. Sept. 7, 2010); In re Ciprofloxacin Hydrochloride Antitrust Litig., 544 F.3d 1323 (Fed. Cir. 2008); Andrx Pharm., Inc. v. Elan Corp., 421 F.3d 1227 (11th Cir. 2005); Schering-Plough, 402 F.3d 1056; Valley Drug Co. v. Geneva Pharm., Inc., 344 F.3d 1294 (11th Cir. 2003); see infra Part II.B.
7. In re Cardizem CD Antitrust Litig., 332 F.3d 896, 900 (6th Cir. 2003); see infra Part II.B.
8. Brief for the United States in Response to the Court's Invitation at 10, Ark. Carpenters, 604 F.3d 98 (Nos. 05-2851-cv(L), 05-2852-cv(CON)), 2009 WL 2429249.
9. The rule of reason analysis "forbid[s] only those arrangements the anticompetitive consequences of which outweigh their legitimate business justifications." Clamp-All Corp. v. Cast Iron Soil Pipe Inst, 851 F.2d 478, 486 (1st Cir. 1988) (Breyer.J.). For a classical statement of the rule of reason, see Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 49 (1977), where the Court stated: "[T]he factfinder weighs all of the circumstances of a case in deciding whether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition."
10. 604 F.3d at 108.
11. See infra Part II.B for a description of the DOJ position. The rule of reason is an antitrust analysis that includes no presumption that an activity is procompetitive or anticompetitive. See infra Part II.B.
12. See 15 U.S.C. § 15(a) (2006).
13. See infra Part III.B (discussing the procompetitive benefits of reverse-payment settlements).
14. Pub. L. No. 98-417, 98 Stat. 1585 (the sections most relevant to reverse-payment settlements are codified as amended in scattered sections of 21 U.S.C.).
15. 21 U.S.C. § 355(j) (2006).
16. Id.
17. See id § 355.
18. Id. § 355(j).
19. Id. § 355(j)(2)(A)(vii).
20. See id. § 355(j)(2)(A)(vii)(IV).
21. Id. § 355 (j)(2)(B).
22. Id. § 355(j)(5). The FDA will not approve an ANDA until forty-five days have passed, giving the patent holder a chance to file a patent-infringement suit if it wishes. Id. If the patent holder does file an infringement suit, there is an automatic thirty-month stay of the ANDA, keeping the generic drug off the market while litigation is conducted. Id. Though the Hatch-Waxman Act provides incentives for generic drugs to enter the market, it also provides brand-name drug manufacturers significant protection, allowing them to maintain their market share while patent-infringement litigation commences.
23. Private and state actions may be subsequendy filed.
24. § 355(j)(5)(B)(iv). The process for ANDA approval is much simpler than the process through which new drugs are approved. ANDA filers need not conduct clinical trials - instead, "generic applicants must scientifically demonstrate that their product is bioequivalent (i.e., performs in the same manner as the innovator drug)." Abbreviated New Drug Application (ANDA): Generics, U.S. FOOD & DRUG ADMIN., http://www.fda.gov/Drugs/ DevelopmentApproval Process/HowDrugsareDevelopedandApproved/ApprovalApplicadons/ AbbreviatedNewDrugApplicationANDAGenerics/default.htm (last updated Aug. 20, 2010).
25. David A. Balto, We'll Sell Generics Too: Innovator Drug Makers Are Gaming the Regulatory System and Harming Competition, LEGAL TIMES (D.C.), Mar. 20, 2006, at 39 ("The bounty from challenging a patent is very important. Pharmaceutical patent litigation is a multimillion-dollar proposition. But for the potential reward of six-month exclusivity that represents the vast majority of potential profits from generic entry, many firms might forgo challenging patents.").
26. See Pub. L. No. 98-417, § 101, 98 Stat. 1585, 1585-92 (codified as amended at 21 U.S.C. § 355 (j)); Wansheng Jerry Liu, Balancing Accessibility and Sustainability: How To Achieve the Dual Objectives of the Hatch-Waxman Act While Resolving Antitrust Issues in Pharmaceutical Patent Settlement Cases, 18 ALB. L.J. SCI. & TECH. 441, 452-53 (2008).
27. Balto, supra note 25.
28. Pub. L. No. 108-173, 117 Stat. 2066 (codified as amended in scattered sections of 21 U.S.C.).
29. 21 U.S.C. § 355 (j)(5)(D)(i)(I).
30. Id.
31. Id. § 355 (j)(5)(D)(iii).
32. 15 U.S.C. § 1 (2006).
33. See, e.g., Ark. Carpenters Health & Welfare Fund v. Bayer AG, 129 S. Ct. 2828 (2009), denying cert. to 544 F.3d 1323 (Fed. Cir. 2008) (per curiam); Joblove v. Barr Labs, Inc., 551 U.S. 1144 (2007), denying cert, to 466 F.3d 187 (2d Cir. 2005); FTC v. Schering-Plough Corp., 548 U.S. 919 (2006), denying cert. to 402 F.3d 1056 (11th Cir. 2005); Andrx Pharm., Inc. v. Kroger Co., 543 U.S. 939 (2004), denying cert. to 332 F.3d 896 (6th Cir. 2003); Valley Drug Co. v. Geneva Pharm., Inc., 543 U.S. 939 (2004), denying cert. to 344 F.3d 1294 (11th Cir. 2003).
34. Broad. Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1, 19-20 (1979).
35. 105 F. Supp. 2d 682, 685 (E.D. Mich. 2000), aff'd, 332 F.3d 896. Cardizem CD is a treatment for chest pain, high blood pressure, and heart attack and stroke prevention. In re Cardizem CD Antitrust Litig., 105 F. Supp. 2d 618, 622 (E.D. Mich. 2000), aff'd, 332 F.3d 896 (earlier order on motions to dismiss). Prior to generic entry, the brand-name drug manufacturer, Hoechst AG, was the only supplier in the over $700 million market for these conditions. Id. at 622-23.
36. Cardizem, 105 F. Supp. 2d at 622-23.
37. Cardizem, 105 F. Supp. 2d at 687.
38. Cardizem, 105 F. Supp. 2d at 625-26.
39. Cardizem, 105 F. Supp. 2d at 687, 697. The agreement further stated that if Andrx were to obtain a judgment that the Cardizem CD patent was either invalid or not infringed by Cartia XT, the payments from Hoechst Marion Roussel to Andrx would increase to $100 million per year. Id. at 698.
40. Cardizem, 105 F. Supp. 2d at 624.
41. Id. at 659. The amendments allowed the alleged infringer to maintain the 180-day exclusivity whether they succeeded in a patent-infringement suit, were not challenged by such a suit, or settled the suit. Id.
42. Id. at 647.
43. Id. at 676-81.
44. Cardizem, 105 F. Supp. 2d at 685. After the antitrust case had been filed, but before the order had been issued, the FTC filed a separate complaint against the parties to the settlement, alleging that the agreement violated the FTC Act. Id. at 690.
45. Id. at 685.
46. Id. at 693.
47. Id. at 705.
48. Id.
49. Id.
50. In re Cardizem CD Antitrust Litig., 332 F.3d 896, 900 (6th Cir. 2003).
51. Id. It held that horizontal market allocations are per se illegal "because they 'have such predictable and pernicious anticompetitive effect, and such limited potential for procompetitive benefit.'" Id. at 906 (quoting State Oil v. Khan, 522 U.S. 3, 10 (1997)).
52. Under the law at the time, the settlement of the patent-infringement suit and the agreement not to market the generic "also delayed the entry of other generic competitors, who could not enter until the expiration of [the ANDA filer's] 180-day period of marketing exclusivity." Id. at 907. Under current law, other competitors would not be barred indefinitely from entering the market, but since the 180-day exclusivity is not available to them, they lack a major incentive to bring a generic drug to market. See supra notes 29-32 and accompanying text.
53. 164 F. Supp. 2d 1340, 1343 (S.D. Fla. 2000), rev'd sub nom. Valley Drug Co. v. Geneva Pharm., Inc., 344 F.3d 1294 (11th Cir. 2003).
54. Id. at 1343, 1349 (quoting United States v. Topco Assocs., Inc., 405 U.S. 596, 608 (1972)) (internal quotation marks omitted).
55. Valley Drug, 344 F.3d at 1295.
56. Id. at 1304 ("If this case merely involved one firm making monthly payments to potential competitors in return for their exiting or refraining from entering the market, we would readily affirm the district court's order. This is not such a case, however, because one of the parties owned a patent.").
57. Id. at 1305.
58. "[A] patentee can choose to exclude everyone from producing the patented article or can choose to be the sole supplier itself or grant exclusive territorial licenses carving up the United States among its licensees." Id. at 1305 (citations omitted).
59. Id. at 1306.
60. Id. at 1305 ("To the extent that Zenith and Geneva agreed not to market admittedly infringing products before the ⋯ patent expired or was held invalid, the market allocation characterization is inappropriate.").
61. Id. at 1308.
62. "There may be circumstances under which the unreasonableness of a settlement agreement regarding a subsequendy-invalidated or unenforceable patent would be sufficiendy apparent that antitrust liability would not undermine the encouragement of genuine invendon and disclosure." Id.
63. Id. at 1309.
64. Id. at 1309-10.
65. In re Terazosin Hydrochloride Antitrust Litig., 352 F. Supp. 2d 1279 (S.D. Fla. 2005).
66. See Valley Drug, 344 F.3d at 1309.
67. Terazosin, 352 F. Supp. 2d at 1298 ("[T]he mere fact that the patent was, at the time, not set to expire until October 2014 cannot immunize Defendants from antitrust scrutiny of their Agreement.").
68. Id.
69. Id. at 1307-08 (considering the costs of the settlement against the savings and reductions in risk afforded by the settlement, the court found that, since the patent-infringement trial was nearly over, the parties had relatively little to gain by settlement).
70. Id. at 1312-13.
71. Id. at 1313 ("[H]orizontal agreements between competitors are antitrust's most 'suspect' classification, which as a group provoke closer scrutiny than any other arrangement.").
72. Id. at 1314.
73. 402 F.3d 1056, 1066 (11th Cir. 2005).
74. Id. at 1058. The plaintiff in the underlying patent-infringement suit, Schering-Plough, was the patent holder of K-Dur 20, a potassium supplement. Id. Two settlements were at issue - one involved a licensing agreement between the parties, and the other, a more typical reverse payment from the patent holder to the ANDA filer. Id. at 1059-61.
75. Schering-Plough Corp., Docket No. 9297, slip op. at 97-98 (F.T.C. June 27, 2002), http://www.ftc.gov/os/adjpro/d9297/020627id.pdf, rev'd, 136 F.T.C. 956 (2003), rev'd, 402 F.3d 1056.
76. Id. at 101-02 (quoting Cal. Dental Ass'n, 121 F.T.C. 190, 308 (1996)) (internal quotation marks omitted).
77. Id. at 99. The judge also specifically found that the license deal for Niacor between Upsher and Schering-Plough was a "bona fide side deal for fair value," and thus the settlement with Upsher was not a reverse-payment settlement, but rather a traditional settlement with a side deal. Id. at 108.
78. Schering-Plough, 136 F.T.C. at 1070.
79. Id. at 998; see also infra Part III.D.1 (discussing Shapiro's theory that reverse-payment settlements are anticompetitive by nature).
80. Schering-Plough Corp., 136 F.T.C. at 1003.
81. Id. For a more detailed examination of the economic incentives involved in a reverse-payment settlement, see infra Part III.
82. Schering-Plough Corp. v. FTC, 402 F.3d 1056 (11th Cir. 2005).
83. Id. at 1076.
84. Id.
85. Id. at 1066.
86. There is some debate as to whether the validity presumption extends to the antitrust setting. See infra Part II.B.4.a.
87. Schering-Plough, 402 F.3d at 1068.
88. The court, like the ALJ, found that the settlement payments were not payments for delay but characterized them as bona fide side deals. Id. at 1070.
89. 421 F.3d 1227 (11th Cir. 2005).
90. Id. at 1235.
91. Id.
92. 466 F.3d 187 (2d Cir. 2006).
93. Id. at 190.
94. Id. at 194.
95. Id. Under today's law, if an ANDA filer fails to actually market the generic drug widiin a given period of time, it forfeits the exclusivity period. See supra notes 29-31 and accompanying text.
96. Id. at 195.
97. Much of the anticompetitive effect of the tamoxifen settlement is a result of the law as it stood at the time, which allowed the parties to obtain vacatur for the finding of patent invalidity and allowed Barr to maintain the 180-day exclusivity period without using it. Under this law, holding the exclusivity without using it prevented other generic drug manufacturers from entering the market indefinitely, creating a bottleneck through which other generic manufacturers could not pass. To the extent that the courts' decisions rest on these other anticompetitive effects, they are not direcdy relevant here; however, in holding that the plaintiffs had not stated an antitrust cause of action, they necessarily include analyses of the reverse-payment element of the case. See Bruce H. Kobayashi, An Economic Analysis of Relitigation Rules in Intellectual Property Litigation (Apr. 21, 2010) (unpublished manuscript), http://www.law.northwestern.edu/searlecenter/uploads/Kobayashi-Relitigation- Final.pdf.
98. In re Tamoxifen Citrate Antitrust Litig., 277 F. Supp. 2d 121, 128-29 (E.D.N.Y. 2003), aff'd, 466 F.3d 187.
99. Tamoxifen, 466 F.3d at 199.
100. Id. at 203 (citing Whitmore ex rel. Simmons v. Arkansas, 495 U.S. 149 (1990) (holding that one death-row inmate does not have standing to challenge the execution of another)).
101. Id. at 208 (quoting Brief for Plaintiffs Appellants at 15, Tamoxifen, 466 F.3d 187 (No. 03-7641), 2004 WL 3564422) (internal quotation marks omitted).
102. Id.
103. Id. at 210.
104. Id. at 206 ("Heeding the advice of several courts and commentators, we decline to conclude (and repeat that the plaintiffs do not ask us to conclude) that reverse payments are per se violations of the Sherman Act ⋯.").
105. Id. at 213-14. Judge Pooler dissents from the Second Circuit's Tamoxifen ruling. She does not directly endorse a different analysis of reverse payments but argues that the court improperly dismissed the case by granting too much deference to the patent invalidated by the district court and failing to allow discovery on the conspiracy and injuries alleged by plaintiffs. Id. at 224 (Pooler, J., dissenting).
106. 604 F.3d 98, 106 (2d Cir. 2010) (per curiam).
107. Id.
108. Id.
109. See id. at 110.
110. Scholars, too, have sought ways to dispose of reverse-payment cases without extensive litigation. However, while scholars have identified potential shortcuts to identify the competitive nature of reverse payments, courts have tended to adopt standards that require no close examination of reverse payments' competitive effects.
111. See supra notes 34-54 and accompanying text.
112. See supra Part II.B.2 (discussing how the Schering-Plough and Tamoxifen courts looked only at whether the effects of the settlements extended beyond the time period covered by the patents). On the one side, Cardizem and Terazosin make it easy to stop a reverse payment with relatively little analysis; on the other, Schering-Plough and Tamoxifen make it difficult to demonstrate that a reverse-payment settlement has unlawful anticompetitive effects.
113. Cont'l T.V., Inc., v. GTE Sylvania Inc., 433 U.S. 36, 49 (1977).
114. Id. at 49-50.
115. Id. at 50 n.16.
116. Broad. Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1, 19-20 (1979).
117. Clamp-All Corp. v. Cast Iron Soil Pipe Inst., 851 F.2d 478, 486 (1st Cir. 1988) (Breyer, J).
118. Cont'l T.V., 433 U.S. at 49.
119. Id.
120. Id. at 50.
121. We argue below that because the procompetitive and anticompetitive effects of reverse payments are neither clear nor consistent, the rule of reason is the appropriate analysis in such cases. See infra Part III.
122. Schering-Plough Corp., Docket No. 9297, slip op. at 96 (F.T.C. June 27, 2002), http://www.ftc.gov/os/adjpro/d9297/020627id ("[B]ecause an agreement to settle patent litigation must be examined in the context in which the agreement arose, the per se approach is not appropriate."), rev'd, 136 F.T.C. 956 (2003), rev'd, 402 F.3d 1056 (11th Cir. 2005).
123. Id.
124. Schering-Plough, 136 F.T.C. at 988.
125. Schering-Plough, 402 F.3d 1056. Instead, it subjected the settlement to an analysis of the exclusionary power of the patent and found that because the settlement was within the bounds of the patent, it thus was not subject to antitrust scrutiny. See supra notes 82-88 and accompanying text.
126. 544 F.3d 1323, 1327 (Fed. Cir. 2008).
127. In re Ciprofloxacin Hydrochloride Antitrust Litig., 363 F. Supp. 2d 514, 541 (E.D.N.Y. 2005), aff'd in part, 544 F.3d 1323, and aff'd in part sub nom. Ark. Carpenters Health & Welfare Fund v. Bayer AG, 604 F.3d 98 (2d Cir.) (per curiam), reh'g en banc denied, Nos. 05-2851-cv(L), 05-2852-cv(CON), 05-2863-v(CON), 2010 WL 3464382 (2d Cir. Sept. 7, 2010).
128. Id. at 523 ("The ultimate question - and this is the crux of the matter - is not whether Bayer and Barr had the power to adversely affect competition for ciprofloxacin as a whole, but whether any adverse effects on competition stemming from the Agreements were outside the exclusionary zone of the ⋯ [p]atent. It goes without saying that patents have adverse effects on competition.").
129. Id. at 535 ("Unless and until the patent is shown to have been procured by fraud, or a suit for its enforcement is shown to be objectively baseless, there is no injury to the market cognizable under existing antitrust law, as long as competition is restrained only within the scope of the patent.").
130. Ciprofloxacin, 544 F.sd at 1332.
131. Id. at 1332-33.
132. The Sixth Circuit has held reverse payments to be per se illegal. See supra Part II.B.1 (discussing the Cardizem case). The Federal, Eleventh, and Second Circuits have held that no antitrust scrutiny is available to such settlements. See supra Part II.B (discussing the Terazosin, Schering-Plough, and Ciprofloxacin cases). The Supreme Court has also declined to impose such a consensus. See supra note 33.
133. 402 F.3d 1056, 1067 (11th Cir. 2005).
134. See Herbert Hovenkamp, Mark Janis & Mark A. Lemley, Anticompetitive Settlement of Intellectual Property Disputes, 87 MINN. L. REV. 1719, 1725 (2003) ("[T]hese cases should be decided on IP grounds because the agreements ⋯ are pro-competitive if, but only if, the patent in question is valid and infringed.").
135. See, e.g., In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 203 (2d Cir. 2006) ("We cannot judge this post-trial, pre-appeal settlement on the basis of the likelihood vel non of [the patent holder's] success had it not settled but rather pursued its appeal.").
136. Schering-Plough, 402 F.3d at 1067.
137. Id. (quoting Simpson v. Union Oil Co. of Cal., 377 U.S. 13, 24 (1964)). In their original context, Justice Douglas used these phrases to distinguish the non-patent price fixing at hand from a 1920s case in which the court allowed General Electric to fix the price of light bulbs, a good for which it then held an active patent. See United States v. Gen. Elec. Co., 272 U.S. 476 (1926) (involving no challenge to General Electric's patent and no administrative scheme to encourage such a challenge).
138. See, e.g., In re Ciprofloxacin Hydrochloride Antitrust Litig., 544 F.3d 1323, 1337 (Fed. Cir. 2008).
139. 35 U.S.C. § 282 (2006).
140. 544 F.3d at 1328-34.
141. Id. at 1333 ("The district court did not treat the Agreements as per se legal. Rather, the court simply recognized that any adverse anti-competitive effects within the scope of the ⋯ patent could not be redressed by antitrust law.").
142. Id.
143. Id. at 1337 ("We disagree that analysis of patent validity is appropriate in the absence of fraud or sham litigation. Pursuant to statute, a patent is presumed to be valid, 35 U.S.C. § 282, and patent law bestows the patent holder with 'the right to exclude others from profiting by the patented invention.'" (quoting Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 176, 215 (1980))); see also Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1066 (11th Cir. 2005) ("[T]he Patent Act essentially provides the patent owner 'with what amounts to a permissible monopoly over the patented work.'" (quoting Telecom Technical Servs. Inc. v. Rolm Co., 388 F.3d 820, 828 (11th Cir. 2004))).
144. See, e.g., In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 208-09, 209 n.22 (2d Cir. 2005); Schering-Plough, 402 F.3d at 1066.
145. See, e.g.. Standard Oil Co. v. United States, 283 U.S. 163, 169 (1931).
146. It is important to note that the exclusionary right granted by a patent does not have the same meaning as the antitrust term "monopoly." Just because a patent grants a right to exclude does not mean that the patent holder is protected from antitrust scrutiny. See I11. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28, 37-42 (2006) (distinguishing between a patent and market power - where antitrust scrutiny requires a showing of market power, the presence of a patent does not lead to a presumption that market power exists).
147. 544 F.3d at 1337 (citing Tamoxifen, 466 F.3d at 208-09). "[T]he essence of the Agreements was to exclude the defendants from profiting from the patented invention." Id. at 1333.
148. Cf. Indep. Ink, 547 U.S. at 32-33 (noting that the Federal Circuit upheld the respondent's illegal tying claim, suggesting its patent gave it a monopoly over how it was used).
149. See Recent Cases, Patents - Presumed Validity of Defendant's Patent Relied On as Indicating Noninfringement, 63 HARV. L. REV. 1437, 1460-61 (1950);
150. see also Lucy Grace Dearce, Deconstructing and Recalibrating the Valley Drug Analysis of Reverse Payments, 47 IDEA 587, 588 (2007) ("While the exclusionary power of a patent cannot be ignored, the courts have improperly presumed infringement and overextended the presumption of validity of a patent merely because one exists.").
151. 713 F.2d 1530, 1534 (Fed. Cir. 1983).
152. Id.
153. Id. at 1534 n.4; see also Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1321-28 (Fed. Cir. 2009); Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 553 (Fed. Cir. 1990).
154. Were the language of § 282 clear in its applicability or inapplicability to various proceedings, the title of the chapter would be irrelevant. But here, where there is ambiguity as to the application of the statutory text, the chapter's title may guide interpretation of the statute. See INS v. Nat'l Ctr. for Immigrants' Rights, Inc., 502 U.S. 183, 189 (1991) ("[T]he title of a statute or section can aid in resolving an ambiguity in the legislation's text.").
155. See, e.g., Stratoflex, 713 F.2d at 1534 ("The presumption, like all legal presumptions, is a procedural device, not substantive law. It ⋯ require [s] the decisionmaker to employ a decisional approach that starts with acceptance of the patent claims as valid and that looks to the challenger for proof of the contrary.").
156. 283 U.S. 163, 174-75 (1931).
157. Id. at 168.
158. Id.
159. Id. at 174-75.
160. Id.
161. Id. at 175-76.
162. Id. at 169." [T]he necessary effect of patent interchange agreements, and the operations under them, must be carefully examined in order to determine whether violations of the Act result." Id. at 169-70.
163. Id. at 168-69.
164. 756 F.2d 852, 855-56 (Fed. Cir. 1985).
165. Id.
166. Id. at 856.
167. See, e.g., Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1066 (11th Cir. 2005); In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 209 n.22 (2d Cir. 2005).
168. 930 F.2d 867, 868 (Fed. Cir. 1991).
169. Id. at 869.
170. Id.
171. Id. at 869 (citations omitted); see also Amazon.com, Inc. v. barnesandnoble.com, Inc., 239 F.3d 1343, 1359 (Fed. Cir. 2001) ("When moving for the extraordinary relief of a preliminary injunction, a patentee ⋯ must ⋯ present a clear case supporting the validity of the patent in suit."); Reebok Int'l Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1555-56 (Fed. Cir. 1994) ("A movant seeking a preliminary injunction must establish a reasonable likelihood of success on the merits both with respect to validity and infringement of its patent.").
172. Cont'l T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 49 (1977) ("The traditional framework of analysis under § 1 of the Sherman Act is familiar and does not require extended discussion ⋯. Under [the rule of reason], the factfinder weighs all of the circumstances of a case in deciding whether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition.").
173. Id. at 49-50.
174. Id.
175. N. Pac. Ry. Co. v. United States, 356 U.S. 1, 5 (1958).
176. But see In re Terazosin Hydrochloride Antitrust Litig., 352 F. Supp. 2d 1279 (S.D. Fla. 2005).
177. See, e.g., Gordon v. Lewistown Hosp., 423 F.3d 184, 210 (3d Cir. 2005) ("[T]he competitive harm is presumed and the defendant must set forth some competitive justification for the restraints.").
178. Cal. Dental Ass'n v. FTC, 526 U.S. 756, 770 (1999).
179. See In re Ciprofloxacin Hydrochloride Antitrust Litig., 544 F.3d 1323, 1332-36 (Fed. Cir. 2008) (giving an example of a court's hinting toward a more nuanced rule of reason analysis).
180. See Brief for the United States, supra note 8.
181. See Steven Seidenberg, The Flip Side of "Reverse Payments," A.B.A. J., Feb. 1, 2010, at 17, 18;
182. see also Helen Cho Eckert, DOJ Formally Aligns Itself with FTC in Opposition To Reverse Payment Settlements, ANTITRUST L. BLOG (Aug. 12, 2009), http://www.antitrustlawblog.com/2009/08/articles/doj-formally-aligns-itself- with-ftc-in-opposition-to-reverse-payment-settlements/.
183. Brief for the United States, supra note 8, at 21-27.
184. See Press Release, FTC, FTC Chairman Leibowitz: Eliminating "Pay-for-Delay" Pharmaceutical Settlements Would Save Consumers $3.5 Billion Annually (June 23, 2009), http://www.ftc.gov/opa/2009/06/ capspeech.shtm.
185. Brief for the United States, supra note 8, at 9.
186. Id. at 9-10. This point is well supported. Nearly all courts have been willing to submit reverse payments to some level of antitrust scrutiny. But see In re Tamoxifen Citrate Antitrust litig., 466 F.3d 187, 208 (2d Cir. 2006) ("[S]o long as the patent litigation is neither a sham nor otherwise baseless, the patent holder is seeking to arrive at a settlement in order to protect that to which it is presumably entitled: a lawful monopoly ⋯").
187. Brief for the United States, supra note 8, at 14. The economic theories presented in Part I do not necessarily go against this assumption, but each theory balances the sides differently. For example, Shapiro believes the intent is that any agreement that makes consumers worse off than they otherwise would have been violates the law. See infra note 233 and accompanying text.
188. The argument is drawn from the scholarship of Professor Carl Shapiro. See infra notes 233-44 and accompanying text.
189. Brief for the United States, supra note 8, at 9-10.
190. The DOJ concedes that reverse-payment settlements may, in some cases, be procompetitive and so should not be condemned by a per se rule. Id. at 20-21 (citing NCAA v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 103-04 (1984)).
191. Id. at 22. "Absent another explanation for it, such a payment is naturally viewed as consideration for the generic's agreement to delay entry beyond the point that would otherwise reflect the parties' shared view of the likelihood that the patentee would ultimately prevail in the litigation." Id. For an argument that reverse payments are not clearly (or "naturally") procompetitive or anticompetitive, see infra Part III.
192. Id. at 26.
193. Id. at 17 n.4 ("[W]e assume throughout that the patented drug at issue lacks substantial competition from other, non-infringing, products so that the patent holder has monopoly power ⋯. While a large reverse payment may strongly suggest such power, market power cannot be presumed to follow from the existence of a patent, but must be proven.").
194. Id. at 30-31.
195. Id. at 31.
196. See, e.g., Cal. Dental Ass'n v. FTC, 526 U.S. 756 (1999) (reversing an application of the quick look rule of reason to restrictions on price and quality claims in advertising); NCAA v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 109 (1984) (stating that "no elaborate industry analysis is required to demonstrate the anticompetitive character or naked restrictions on competition (quoting Nat'l Soc'y of Prof'l Eng'rs v. United States, 435 U.S. 679, 692 (1978)) (internal quotation marks omitted)); N. Tex. Specialty Physicians v. FTC, 528 F.3d 346 (5th Cir. 2008) (quick look as an appropriate analysis for price-fixing scheme), cert. denied, 129 S. Ct. 1313 (2009).
197. Cal. Dental Ass'n, 526 U.S. at 770, 776; see supra Part II.B.4.b (discussing quick look analysis).
198. In re Tamoxifen Citrate Antitrust Litig., 429 F.3d 370, 392 (2d Cir. 2005), amended by 466 F.3d 187 (2d Cir. 2006).
199. James Langenfeld & Wenqing Li, Intellectual Property and Agreements To Settle Patent Disputes: The Case of Settlement Agreements with Payments from Branded to Generic Drug Manufacturers, 70 ANTITRUST L.J. 777, 778 (2003).
200. Id. at 778-801.
201. Id.
202. See Asahi Glass Co. v. Pentech Pharm., Inc., 289 F. Supp. 2d 986, 994 (N.D. I11. 2003) ("A ban on reverse-payment settlements would reduce the incentive to challenge patents by reducing the challenger's settlement options should he be sued for infringement, and so might well be thought anticompetitive.").
203. The Hatch-Waxman Act presents a special incentive for patent holders to attempt to reach settlements with alleged infringers. If the patent holder can delay the first ANDA filer, other generic manufacturers will face lesser incentives to attempt to enter the same market because the 180-day exclusivity period will not be available to them. See Hatch-Waxman Act, 21 U.S.C. § 355(j)(5)(B)(iv)(2006).
204. See Carl Shapiro, Antitrust Limits to Patent Settlements, 34 RAND J. ECON. 391, 397-99 (2003);
205. see also Robert J. Rhee, A Price Theory of Legal Bargaining: An Inquiry into the Selection of Settlement and Litigation Under Uncertainty, 56 EMORY L.J. 619, 620-21 (2006) (describing the "conventional wisdom" that settlement terms are primarily determined by the damages expected and each side's probability of prevailing).
206. A settlement is more likely to occur at the end of discovery, at which point the parties will have as much information as possible regarding their chances of prevailing at trial.
207. Because the Hatch-Waxman Act automatically precludes the generic manufacturer from entering the market for thirty months after filing a patent-infringement suit, negotiated entry during this time is unlikely because even a patent holder that does not believe it will prevail at trial could maintain its exclusivity for these thirty months.
208. This presumption may not be valid in all circumstances. See infra Part III.C.5 (discussing the decreased marketing efforts by a patent holder after a generic entry).
209. See Shapiro, supra note 202, at 407-08.
210. Before generic entry, the brand's profits from a drug can be large because of its ability to restrict output and raise prices. See Figure 3. Once the generic enters, much of the market shifts away from the brand to the generic.
211. This possibility motivates a recently proposed bill. See infra note 313 and accompanying text.
212. Bethany McLean, A Bitter Pill, FORTUNE, Aug. 13, 2001, available at http://money.cnn.com/magazines/fortune/fortune-archive/2001/08/13/308077/index. htm.
213. Sumanth Addanki & Alan J. Daskin, Patent Settlement Agreements, in 3 ABA SECTION OF ANTITRUST LAW, ISSUES IN COMPETITION LAW AND POLICY 2127, 2131 (2008).
214. Id.
215. Id.
216. See infra Part IV.A for our proposed methods of determining whether a given reverse-payment settlement is procompetitive or anticompetitive.
217. See, e.g., Addanki & Daskin, supra note 210, at 2131.
218. This context can only apply to reverse payments of a certain magnitude. For example, a reverse payment that is more than the generic could make by
219. Addanki & Daskin, supra note 210, at 2130-31.
220. See Hovenkamp, Janis & Lemley, supra note 134, at 1758.
221. See infra text accompanying note 279.
222. See, e.g., Gregory K. Leonard & Rika Onishi Mortimer, Antitrust Implications of Pharmaceutical Patent Litigation Settlements, in NERA ECON. CONSULTING, ECONOMIC APPROACHES TO INTELLECTUAL PROPERTY POLICY, LITIGATION, AND MANAGEMENT 251, 261-64 (Gregory K. Leonard & Lauren J. Stiroh eds., 2005).
223. See id. at 264 ("[A] settlement that is consumer welfare reducing may nevertheless be social welfare enhancing.").
224. See infra text accompanying Figure 6.
225. Leonard & Mortimer, supra note 219, at 261-64.
226. See, e.g., Hovenkamp, Janis & Lemley, supra note 134, at 1759.
227. In a well-functioning capital market, an ANDA filer with insufficient resources to pursue a meritorious claim should be able to find financing. In reality, differences in perceptions of the value of the claim may raise the transaction costs of such financing to a prohibitive level.
228. See Leonard & Mortimer, supra note 219, at 257.
229. See id. at 264 ("We conclude that, with potential disagreements concerning the probability that the plaintiff will win the lawsuit, a settlement may not be feasible without reverse payments.").
230. See supra notes 208-09 and accompanying text.
231. A settlement, however, that allows entry later than either side's benchmark cannot be explained by these different estimates of chances at trial.
232. See, e.g., Keith N. Hylton & Sungjoon Cho, Injunctive and Reverse Settlements in Competition-Blocking Litigation 14 (Bos. Univ. Sch. of Law, Working Paper No. 09-47, 2009), available at http://papere.ssm.com/sol3/papers. cfm?abstract-id=1490013.
233. See Schering-Plough Corp., Docket No. 9297, slip op. at 107 (F.T.C. June 27, 2002), http://www.ftc.gov/os/adjpro/d9297/020627id.pdf (finding that the side deal was bona fide), rev'd, 136 F.T.C. 956 (2003), rev'd, 402 F.3d 1056 (11th Cir. 2005).
234. Eg., C. Scott Hemphill, An Aggregate Approach to Antitrust: Using New Data and Rulemaking To Preserve Drug Competition, 109 COLUM. L. REV. 629, 633 (2009) ("An aggregate approach ⋯. reveals that these sorts of deals are a frequent component of settlements, but rare outside of settlement. Thus, the overall pattern suggests they provide a disguised means to confer payment"); cf. Schering-Plough, slip op. at 107 (finding that the side deal was bona fide).
235. Hemphill, supra note 231, at 633 (explaining how side deals rarely happen in other contexts).
236. Shapiro, supra note 202, at 391.
237. Id. at 396. Shapiro defines the phrase "well off" according to the prices paid by consumers for a specific drug. However, because reverse-payment policy balances two worthy goals - keeping drug costs low and encouraging new drug innovation - it is not clear that creating maximum competition in the short term will make consumers the most "well off" in the long term.
238. Id. at 393. Shapiro's shift here is subtle. Rights are traditionally found when enforceable, but Shapiro argues that whatever right a patent grants does not reach full strength until actually enforced.
239. Id. at 395 ("What the patent grant actually gives the patentholder is the right to sue to prevent others from infringing the patent."). The patent right is imperfect, Shapiro argues, because, inter alia, there are significant costs associated with enforcing a patent. Id.
240. Notably, the existence of patents would seem to go against Shapiro's test. Any legal monopoly will serve to make available drugs more expensive, but the policy we have chosen falls somewhere between absolute competition (cheapest possible drugs) and absolute monopolies (greatest possible incentive to innovate new drugs).
241. See Shapiro, supra note 202, at 396.
242. Id.
243. Id. at 408. Note that the assumption that settlements represent only estimated chances of victory at trial may be unfounded. See supra Part III.C.4.
244. Id. at 407-08.
245. Note that even with reverse payments, for cases where the generic would not have prevailed at trial, the settlement does increase overall competition, as compared to the outcome had there been a trial.
246. Shapiro, supra note 202, at 397.
247. See id.
248. Joshua P. Davis, Applying Litigation Economics to Patent Settlements: Why Reverse Payments Should Be Per Se Illegal, 41 RUTGERS L.J. (forthcoming 2010) (manuscript at 41), available at http://ssrn.com/abstract=1489090.
249. Id. at 17.
250. Id. at 7.
251. Id. at 17.
252. Id. at 27.
253. Hovenkamp, Janis & Lemley, supra note 134, at 1720 ("[Patent] settlements involve agreements between the patentee and the accused infringer ⋯. Because these competitors may agree to stop competing ⋯ settlements of IP disputes naturally raise antitrust concerns.").
254. Id. Reverse payments are clearly such a case. Were the patent at issue in the settlement either invalid or not infringed, the agreements not to compete inherent in reverse-payment settlements would be clearly and unreasonably anticompetitive. Id.
255. Id. at 1725.
256. Id. at 1724.
257. See generally Shapiro, supra note 202 ("If the patent is very strong ⋯ the challenger is unlikely to offer much independent competition to the patentholder if litigation proceeds.").
258. Hovenkamp, Janis & Lemley, supra note 134, at 1725.
259. Id. at 1734. "Unfortunately, these inquiries may be the very ones that the settlement agreement itself sought to forestall because of their complexity and uncertainty. That is why it is critical that these inquiries be made no more often than necessary." Id.
260. Id. at 1759.
261. Id. at 1758-59.
262. Leonard & Mortimer, supra note 219, at 260-64.
263. Id. at 260.
264. Id. at 261. Leonard and Mortimer also consider the effects that parties' aversion to risk have on reverse-payment settlements. They find that while risk aversion may make parties more likely to engage in a reverse-payment settlement, it does not make that settlement more or less anticompetitive. Id. at 264; see Addanki & Daskin, supra note 210. They argue that a per se rule prohibiting all reverse payments is inappropriate. Instead, reverse payments must be evaluated in context under the rule of reason. Leonard & Mortimer, supra note 219, at 261.
265. Hovenkamp, Janis & Lemley, supra note 134, at 1762.
266. See supra notes 251-55 and accompanying text.
267. Daniel A. Crane, Exit Payments in Settlement of Patent Infringement Lawsuits: Antitrust Rules and Economic Implications, 54 FLA. L. REV. 747, 751-52 (2002) (footnote omitted).
268. See id. at 776 ("The optimal legal position regarding such settlements requires taking into account all of the relevant costs and formulating a rule that harmonizes the competing strands of public policy.").
269. See id. at 749 (citing United States v. Singer Mfg. Co., 374 U.S. 174 (1963)).
270. Id. at 778-79.
271. Id.
272. But see Valley Drug Co. v. Geneva Pharm., Inc., 344 F.3d 1294, 1307 (11th Cir. 2003) ("Good faith procurement furnishes a complete defense to the antitrust claim.").
273. Crane, supra note 264, at 780.
274. Id. at 779 ("Courts and antitrust enforcers easily see the costs of permitting the settlement of unmeritorious patent infringement claims - deadweight losses in the form of monopoly pricing dial could be avoided if litigation were required and the patentee's monopolistic claims rejected.").
275. Id. at 782 ("The difficulty is in formulating a way of determining the expected outcome of the lawsuit without requiring a full-blown inquiry into the merits, which would effectively mean the adoption of a no-exit-payment rule.").
276. This Article, too, proposes guidelines for when a court should consider a reverse-payment settlement to be anticompetitive and when it should not. Crane's standards focus on the underlying patent-infringement suit; our standards forego this analysis, which would nullify the value of the settlement, in favor of an examination of the context in which the settlement occurs. See supra Part III.
277. Crane, supra note 264, at 779-80.
278. Id. at 783.
279. Id. at 785-88.
280. Id. at 792.
281. See id. at 794-95.
282. Id. at 788.
283. See, e.g., Addanki & Daskin, supra note 210, at 2130-32.
284. Crane, supra note 264, at 782.
285. 526 U.S. 756 (1999).
286. 128 F.3d 720, 727-28 (9th Cir. 1997), vacated, 526 U.S. 756.
287. Cal. Dental Ass'n, 526 U.S. at 774.
288. Id.
289. FTC, GENERIC DRUG ENTRY PRIOR TO PATENT EXPIRATION: AN FTC STUDY (2002), available at http://www.ftc.gov/os/2002/07/genericdrugstudy.pdf.
290. Hemphill, supra note 231.
291. Id. at 631.
292. See id. at 634.
293. See supra Part II (describing the case history of reverse-payment settlements).
294. S. 369, 111th Cong. (2009). The U.S. Senate introduced the PAAG bill in February 2009 and placed it on the Senate calendar as item No. 183 by the Senate Judiciary Committee on October 15, 2009. Library of Cong., Bill & Summary Status, THOMAS, http://www.thomas.gov (search "S. 369" in "Bill Number" search field; then follow "All Congressional Actions" hyperlink). The House of Representatives has a similar bill, the Protecting Consumer Access to Generic Drugs Act of 2009, H.R. 1706, 111th Cong. (2009), which is still in the House Judiciary Committee.
295. Cont'l T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 50 (1977).
296. N. Pac. Ry. Co. v. United States, 356 U.S. 1, 5 (1958).
297. Cal. Dental Ass'n v. FTC, 526 U.S. 756, 759 (1999).
298. Other scholars, most notably Crane and Hovenkamp et al., have proposed methods for simplifying the rule of reason inquiry. Unlike the suggestions we present here, Crane and Hovenkamp et al. focus on the strength of the underlying patent-infringement suit Crane argues dial the rule of reason analysis should be guided by the likely outcome of the patent-infringement suit, had it not settled, and provides guidelines for identifying the likely outcome of that case. Crane, supra note 264, at 783. Hovenkamp et al. suggest that a reverse payment must be "no more than the expected value of litigation and collateral costs attending the lawsuit." Hovenkamp, Janis & Lemley, supra note 134, at 1759. These methods, focusing on the underlying suit, have a major problem - the outcome of a trial is not knowable without conducting something that closely resembles a trial. Examining the underlying patent-infringement suit in anything other than a cursory way will eliminate the efficiencies that parties hope to gain by settling rather than litigating the underlying suit. Imposing a reexamination of the underlying suit on a settlement would essentially create a per se rule against reverse-payment settlements, simply because parties would have little incentive to settle a case if they will have to litigate the same issues within the context of an antitrust suit.
299. Though market power is not a necessary element of a section 1 Sherman Act case, it may be relevant.
300. This is not to suggest that market power is a necessary element of an unreasonably anticompetitive agreement. See generally Mark R. Patterson, The Market Power Requirement in Antitrust Rule of Reason Cases: A Rhetorical History, 37 SAN DIEGO L. REV. 1 (2000) (discussing the roles that courts have allowed market power to play in antitrust litigation).
301. Brief for the United States, supra note 8, at 17 n.4.
302. See supra notes 19-20 and accompanying text (discussing ANDA applications and paragraph IV certification).
303. Crane, supra note 264, at 788.
304. See Schering-Plough Corp., 136 F.T.C. 956, 1062 (2003), rev'd, 402 F.3d 1056 (11th Cir. 2005).
305. See Brief for the United States, supra note 8, at 28.
306. Id. at 29.
307. See Leonard & Mortimer, supra note 219, at 261.
308. Crane, supra note 264, at 788-91; see also Valley Drug Co. v. Geneva Pharm., Inc., 344 F.3d 1294, 1309-10 (11th Cir. 2003) ("It may be that the size of the payment to refrain from competing, sometimes called a 'reverse payment' or an 'exit payment,' raises the suspicion that the parties lacked faith in the validity of the patent ⋯.").
309. See supra Part III.C.5.
310. See, e.g., Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172 (1965).
311. This factor comes the closest to an examination of the underlying suit but only engages in a cursory examination to determine whether it was a sham. Any suit that proceeds past the motion-to-dismiss phase is not likely to be a sham.
312. See supra notes 231-32 and accompanying text.
313. Schering-Plough Corp., Docket No. 9297, slip op. at 107 (F.T.C. June 27, 2002), http://www.ftc.gov/os/adjpro/d9297/020627id.pdf (finding that the side deal was bona fide), rev'd, 136 F.T.C. 956 (2003), rev'd, 402 F.3d 1056 (11th Cir. 2005); Hemphill, supra note 231, at 633 ("An aggregate approach ⋯. reveals that these sorts of deals are a frequent component of settlements, but rare outside of settlement. Thus, the overall pattern suggests they provide a disguised means to confer payment.").
314. See Yuki Onoe, Comment, 'Pay-for-Delay' Settlements in Pharmaceutical Litigation: Drawing a fine Line Between Patent Zone and Antitrust Zone, 9 JOHN MARSHALL REV. INTELL. PROP. L. 527, 536 (2009) ("[The rule of reason] involves a detailed three-step analysis starting with the requirement for the plaintiff to prove an 'actual adverse effect on competition as a whole in the relevant market.' If the proof is acceptable, then the defendant must demonstrate procompetitive effects. When the defendant meets the burden, the plaintiff must present 'less restrictive' alternatives. The first step of this analysis is essential and requires determination of whether the 'harm is not only possible but likely and significant.'" (footnotes omitted)).
315. See Frank H. Easterbrook, The Limits of Antitrust, 63 TEX. L. REV. 1, 14-16 (1984) (outlining the two possible error types and arguing that prosecuting legitimate conduct is more costly than allowing some anticompetitive conduct to go unchallenged);
316. See also Geoffrey A. Manne & Joshua D. Wright, Innovation and the Limits of Antitrust, 6 J. COMPETITION L. & ECON. 153, 159-68 (2010) (providing a technical analysis of Easterbrook's error-cost framework).
317. S. 369, 111th Cong. (2009); see also Protecting Consumer Access to Generic Drugs Act of 2009, H.R. 1706, 111th Cong. (2009) (making reverse payments per se illegal under the FTC Act).
318. See, e.g., Shapiro, supra note 202.
319. Of course, this error must be weighed against increased competition between brand-name drugs when high profits attract research, development, and marketing of new drugs.
320. See, e.g., Addanki & Daskin, supra note 210.
321. S. 1315, 111th Cong. (2009).
322. See Hatch-Waxman Act, 21 U.S.C. § 355(j)(5) (2006) (allowing the exclusivity period for the generic manufacturer to start immediately following the NDA filing).
323. See id. § 355 (j)(5)(D)(iii).
324. S. 1315.
325. See id.
326. Id.
327. Of course, if the first filer chose to forego the exclusivity option, and a subsequent filer opted to take the 180 days, its exclusivity period would exclude all manufacturers except previous ANDA filers who opted to forego the exclusivity period.
328. Of course, the exclusivity period would only bar subsequent entrants, not previous ANDA filers who settled with reverse payments.