Granted, I’ve argued elsewhere that the D.C. Circuit and the Commission was misunderstood the empirical basis supporting the link between the moratorium agreement and negative consumer welfare effects — BUT, the logic of the relationship between empirical knowledge of bad effects and burdens makes sense.

Applied here, isn’t Professor Crane’s point that we don’t know enough about the consequences of these agreements (and their social costs) to condemn them on the basis of the observation of a reverse payment? In other words, the presence of the reverse payment is not a good predictor of negative welfare consequences. That claim may or may not hold up as an empirical matter, but it seems to me to be the right inquiry before we slap on a presumption of illegality to a class of agreements.

To be clear, I’m not taking a position here on the the likely social consequences of a rule that banned reverse payments. And of course, one can argue by analogy that reverse payments are like other agreements that are presumptively illegal. But again, I think that evades the point Dan is making here about what we know and don’t know about the relationship between these settlements and social welfare.