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UC Law Science and Technology Journal

Michele M. Kang

Abstract

Pharmaceutical companies spend much of their time and resources in conducting clinical trials for developing new drugs. Under the Hatch- Waxman Act, generic drugs can refer to the same clinical trials that the initial pharmaceutical companies have done, if they prove similarities in the biological makeup of both drugs. A trend that has developed in response to the Hatch- Waxman Act is that pharmaceutical companies have been paying off generic companies not to enter into their market — this is referred to as a reverse payment patent settlement. While proving to be beneficial to the pharmaceutical industry, reverse payments create a public interest problem by taking away public access to cheaper drugs and creates an antitrust issue by allowing the pharmaceutical companies to monopolize the market-space. However, in FTC v. Actavis, the U.S. Supreme Court held that reverse payment settlements were not illegal but that the FTC could not be prevented from bringing an antitrust action against reverse payments. This note will discuss the implications of this decision in determining what constitutes a reverse payment. Some courts have ruled that Actavis requires cash payments, and others rule that Actavis applies to reverse payment settlements involving noncash compensation. The note will address how the Hatch-Waxman Act has affected patent law, specifically in the pharmaceutical sphere. Additionally, this note addresses the “paragraph IV” route of patent litigation and how the circuit courts have ruled on this issue.

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