Testimony on HB 1902 Prohibiting "Pay for Delay" Settlements

Josh Wright —  3 May 2007

David Fischer brings my attention to testimony on HB 1902 which would prohibit “payment for delay” settlements between brand name and generic drug companies.  FTC Commissioner Leibowitz testified on the position of my new employer here.

I also learned from reading Scott Hemphill’s testimony and submission (Columbia Law), which relies upon and includes some of his excellent work documenting the characteristics of these settlements and analyzing their effects.  If you have time to read more than Scott’s 138 page submission … check out Phil Proger’s (JDRP) submission.  Here is Proger’s punchline:

I conclude (1) that reverse payments are not “reverse” and not always anticompetitive; (2) that the proposed solution is not a competitive solution at all, and is contrary to the historical role of Congress in enacting antitrust legislation and the FTC in conducting antitrust enforcement; and finally, (3) that adopting a broadly inclusive per se ban on any settlement “for value” will have unintended consequences that could actually inhibit incentives for generic entry, and may alter the balance between drug innovation and affordability that Hatch-Waxman currently embodies.  For all of these reasons, it is my view that issues raised by H.R. 1902 warrant further study. H.R. 1902 would adopt for the first time the blunt instrument of a per se antitrust rule against specific conduct in a specific industry. Such a step would be a departure for Congress, which has previously (and wisely) decreed that antitrust practices should be measured by competitive standards.