Document Type
Article
Publication Date
10-2014
Abstract
The Supreme Court’s opinion in Federal Trade Commission v. Actavis, Inc. provided fundamental guidance about how courts should handle antitrust challenges to reverse payment patent settlements. In our previous article, Activating Actavis, we identified and operationalized the essential features of the Court’s analysis. Our analysis has been challenged by four economists, who argue that our approach might condemn procompetitive settlements.
As we explain in this reply, such settlements are feasible, however, only under special circumstances. Moreover, even where feasible, the parties would not actually choose such a settlement in equilibrium. These considerations, and others discussed in the reply, serve to confirm the wisdom of the Actavis inference, in which the observation of a large reverse payment serves as a “surrogate” for patent-case weakness and therefore for lost competition.
Keywords
antitrust, drugs, FTC, Hatch-Waxman, innovation, patent, Paragraph IV, pay for delay, pharmaceuticals, regulation, reverse payment, settlement
Publication Title
The Antitrust Source
Repository Citation
Edlin, Aaron S.; Hemphill, C. Scott; Hovenkamp, Herbert J.; and Shapiro, Carl, "Actavis and Error Costs: A Reply to Critics" (2014). All Faculty Scholarship. 1823.
https://scholarship.law.upenn.edu/faculty_scholarship/1823
Included in
Antitrust and Trade Regulation Commons, Civil Procedure Commons, Entrepreneurial and Small Business Operations Commons, Health Economics Commons, Health Law and Policy Commons, Industrial Organization Commons, Intellectual Property Law Commons, Law and Society Commons, Litigation Commons, Public Health Commons, Technology and Innovation Commons
Publication Citation
The Antitrust Source, October 2014