The FTC's Latest Remarks In Opposition To Reverse Payment Settlements: Banning Them Would Save Consumers $35 Billion

The Federal Trade Commission's Chairman, Jon Leibowitz, continued the FTC's aggressive campaign against reverse payment settlements (also called "pay-for-delay" or "exclusion" settlements) by delivering a speech at the Center for American Progress entitled "'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). In his speech, Chairman Leibowitz reiterated that banning such settlements -- settlements of patent disputes in which the brand name pharmaceutical company makes a "reverse" or "exclusion" payment to the would-be generic competitor to delay its entry into the relevant drug market -- is one of the FTC's highest priorities. He also reiterated the FTC's position that because the profits that a would-be generic competitor anticipates making by entering the market are significantly less than the profits the brand-name firm stands to lose, both parties have greater incentives to settle their patent disputes and share in the monopoly profits than to compete with one another. While reverse payment settlements are "win-win" propositions for both settling parties, American consumers, on the other hand, bear the ultimate costs of such settlements.

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