Papers by Michael Carrier
In FTC v. Actavis, the Supreme Court held that a brand firm's payment to a generic to delay e... more In FTC v. Actavis, the Supreme Court held that a brand firm's payment to a generic to delay entering the market could violate the antitrust laws. In one of the first post-Actavis decisions, the New Jersey district court in In re Lamictal Direct Purchaser Antitrust Litigation issued a narrow, formalistic ruling on the question of what constitutes a payment.In the settlement at issue, GlaxoSmithKline agreed (in what is known as a no-authorized-generic provision) not to launch its own generic version of epilepsy- and bipolar-disorder-treating Lamictal during Teva’s 180-day exclusivity period, which the Hatch-Waxman Act reserves for the first generic to challenge a brand firm’s patent.This short article highlights two flaws in the opinion. First, the ruling was formalistic in concluding that Actavis was limited to cash payments. And second, the court invoked Actavis’s “five considerations” (which explained why antitrust immunity was not appropriate) as defenses the settling parties could offer.The article concludes that future courts would benefit from more directly focusing on the substance of brand conveyances to generics and more carefully following the Supreme Court’s guidance.
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The Supreme Court’s decision in FTC v. Actavis has received widespread attention for its antitrus... more The Supreme Court’s decision in FTC v. Actavis has received widespread attention for its antitrust analysis of settlements by which brand-name drug companies pay generics to delay entering the market. Much of the attention has focused on the continued enforcement of these “reverse payment” agreements and the logistics of applying the Court’s rule-of-reason analysis. Less attention has been paid to the watershed nature of the decision in rejecting pro-settlement arguments offered by the settling parties and adopted by the federal appellate courts.This article catalogs the arguments that the settling parties offered, and the majority of appellate courts adopted, in upholding the agreements. It highlights their prevalence before Actavis and their rejection in the opinion. The arguments concern: (1) the scope of the patent, (2) the importance of settlements, (3) the consequence of large payments, (4) the likelihood of settlement without payment, and (5) the presence of multiple generic challengers.The Actavis opinion was crucial in eliminating (or at a minimum dramatically reducing) the effect of these arguments, which had the potential to immunize reverse-payment settlements from antitrust review. In rejecting the arguments and ensuring a robust role for antitrust, Actavis was a momentous decision.
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SSRN Electronic Journal, 2010
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The patent system is designed to promote innovation. But the U.S. Patent and Trademark Office (“P... more The patent system is designed to promote innovation. But the U.S. Patent and Trademark Office (“PTO”) cannot devote the resources necessary to grant only valid patents. This Article explores one mechanism to address this challenge: a post-grant opposition procedure that would allow any party to challenge a patent after it is issued. It explains why such a system is superior to other alternatives, such as improved PTO review, litigation, or reexamination. An opposition system offers numerous benefits. It targets the most valuable patents, increases access to competitors’ information, reduces the number of invalid patents, and provides a quicker and cheaper determination of validity than litigation. In the deluge of patent applications confronting the PTO in the 21st century, an effective post-grant opposition system promises to promote innovation. Shortly before this Article went to press, Congress had passed the America Invents Act, patent reform legislation that included a post-gra...
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In the past few years, proposed copyright legislation and trade agreements have received signific... more In the past few years, proposed copyright legislation and trade agreements have received significant attention. Critics have attacked the secrecy with which trade agreements are negotiated behind closed doors. And they have pointed out concerns with legislation including censorship, a lack of due process, and compromised Internet security. But the effect of these developments on innovation has not received sufficient attention. This article addresses this gap. The article discusses the effects of four copyright proposals on innovation: the Stop Online Piracy Act (SOPA), PROTECT IP Act (PIPA), Anti-Counterfeiting Trade Agreement (ACTA), and Trans-Pacific Partnership Agreement (TPP). These proposals contain provisions that would impose copyright liability in a vague and far-reaching manner that would harm innovators, dissuade venture capitalists, and ultimately stifle innovation. In particular, the “aid or abet” and “enable or facilitate” standards are far less predictable than existi...
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This short symposium article examines proposed congressional legislation addressing settlements i... more This short symposium article examines proposed congressional legislation addressing settlements in the pharmaceutical industry. Brand-name drug companies have paid generic firms to settle patent litigation and delay entering the market. In recent years, appellate courts have blessed these agreements. And as the Supreme Court has sat on the sidelines, it is becoming ever more apparent that Congress will play a crucial role in addressing this problem. This article explores the three pieces of legislation that have been introduced to address this problem. The first targets payments from brands to generics in exchange for delayed entry into the market. A strong version of such "reverse-payments" legislation would reach the most egregiously anticompetitive agreements, those in which the brand pays millions (if not hundreds of millions) of dollars to the generic to delay entering the market. The second addresses the introduction of authorized generics within the exclusivity peri...
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On April 25, 2013, Judge James L. Robart of the U.S. District Court for the Western District of W... more On April 25, 2013, Judge James L. Robart of the U.S. District Court for the Western District of Washington offered the first analysis by a U.S. court of an appropriate royalty that a patentee could obtain after promising to license its patent on reasonable and nondiscriminatory (RAND) terms. Microsoft had sued Motorola for breach of contract, claiming that Motorola had breached its RAND obligation through two offer letters that (in seeking 2.25% of the net selling price of end products) would have required Microsoft to pay $4 billion.In an exhaustive, 207-page opinion, Judge Robart constructed a framework for determining an appropriate RAND rate and applied it to reach a result that, according to Microsoft, would require it to pay only $1.8 million. This 5-page article first recounts the court’s adjustment of the 15 “Georgia-Pacific” factors for determining reasonable royalties to account for the RAND context. It then describes the standards at issue: H.264 (video compression) and 8...
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This roundtable explores issues presented by "reverse payment" settlements by which bra... more This roundtable explores issues presented by "reverse payment" settlements by which brand-name drug companies pay generic firms to delay entering the market. Kent Bernard, Karen Bokat, Michael Carrier, Howard Morse, and Eric Stock explore the history of the settlements, potential legislation, future enforcement efforts, activity in Europe, anticipated market behavior, and predictions about the Court's ruling in FTC v. Actavis.
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SSRN Electronic Journal, 2003
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Drug patent settlements present some of the most nuanced issues in patent and antitrust law today... more Drug patent settlements present some of the most nuanced issues in patent and antitrust law today. Does a brand-name drug company's payment to a generic firm cause delayed entry? Does a brand's forgiveness of a generic's potential damages constitute payment? How should courts evaluate parties' simultaneous settlement of multiple cases?To this universe of complex questions, courts have added one that is embarrassingly easy: Is there a payment when a brand promises not to introduce its own generic (known as an "authorized generic" or "AG"), which could be worth millions of dollars to the generic? Under any reasonable interpretation of economics, the Supreme Court's 2013 decision in FTC v. Actavis, or common sense, such a promise constitutes payment.In two recent cases, however, courts held that brands' no-AG promises did not count as payment. The New Jersey district court in In re Lamictal Direct Purchaser Antitrust Litigation found that &qu...
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One of the most pressing issues in patent and antitrust law today involves agreements by which br... more One of the most pressing issues in patent and antitrust law today involves agreements by which brand-name drug companies pay generic firms to delay entering the market. In June 2013, in FTC v. Actavis, Inc., the U.S. Supreme Court concluded that these "exclusion payment"1 settlements (in which exclusion comes from the payment rather than the patent) could have "significant anticompetitive effects" and violate the antitrust laws.In ensuring a robust role for antitrust analysis, the Court handed down one of the most important business cases in the past generation. And it articulated a blueprint for future analysis based on antitrust law's "rule of reason." But the Court did not specify every step in the analysis or consider every type of settlement. Instead, it called on "lower courts . . . [to] structur[e] . . . the present rule-of-reason antitrust litigation."Along these lines, two recent district court rulings portend ominous signs. In th...
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IO: Regulation, 2015
In O’Bannon v. National Collegiate Athletic Ass’n, then-Chief Judge Claudia Wilken of the U.S. Di... more In O’Bannon v. National Collegiate Athletic Ass’n, then-Chief Judge Claudia Wilken of the U.S. District Court for the Northern District of California issued a groundbreaking decision, potentially opening the floodgates for challenges to National Collegiate Athletic Association (NCAA) amateurism rules. The NCAA was finally put to a full evidentiary demonstration of its amateurism defense, and its proof was found emphatically wanting.We agree with Professor Edelman that O’Bannon could bring about significant changes, but only if the Ninth Circuit affirms. We write mainly to address the NCAA’s vigorous pending appeal and the views of certain amici, and to explain our strong support for the result at trial.Reversal of Judge Wilken’s comprehensive and thoughtful decision would thwart needed changes just as colleges are beginning to embrace them and would be mistaken as a matter of law. O’Bannon is a correct, justifiable, garden-variety rule-of-reason opinion and should be affirmed by the...
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Consumers suffer from high drug prices, which stem in large part from pharmaceutical companies’ a... more Consumers suffer from high drug prices, which stem in large part from pharmaceutical companies’ anticompetitive games. This essay discusses the crucial role antitrust enforcement agencies can play in addressing pay-for-delay settlements and product hopping and draws lessons from this enforcement. In particular, it explains how, learning from the experience with U.S. pay-for-delay settlements, the Chilean National Economic Prosecutor’s Office (FNE) should consider the potential downsides from exclusivity periods that make it easier for brand firms to keep generics off the market. And it explains how the Federal Trade Commission and FNE can target product hopping that makes no sense other than by harming the generic.
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103 Cornell L. Rev. 1 (2017)Rising drug prices are in the news. By increasing price, drug compani... more 103 Cornell L. Rev. 1 (2017)Rising drug prices are in the news. By increasing price, drug companies have placed vital, even life-saving, medicines out of the reach of consumers. In a recent development, brand firms have prevented generics even from entering the market. The ruse for this strategy involves risk-management programs known as Risk Evaluation and Mitigation Strategies (“REMS”). Pursuant to legislation enacted in 2007, the FDA requires REMS when a drug’s risks (such as death or injury) outweigh its rewards. Brands have used this regime, intended to bring drugs to the market, to block generic competition. Regulations such as the federal Hatch-Waxman Act and state substitution laws foster widespread generic competition. But these regimes can only be effectuated through generic entry. And that entry can take place only if a generic can use a brand’s sample to show that its product is equivalent. More than 100 generic firms have complained that they have not been able to acces...
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This Supreme Court amicus brief, filed in Federal Trade Commission v.Watson, explains why exclusi... more This Supreme Court amicus brief, filed in Federal Trade Commission v.Watson, explains why exclusion-payment settlements, by which brand-namedrug companies pay generic firms to delay entering the market, contravenethe policies of patent law, antitrust law, and the Hatch-Waxman Act. Itaddresses five points.First, the settlements are not consistent with the Hatch-Waxman Act,Congress’s framework for balancing patent and antitrust law in thepharmaceutical industry, which encouraged generics to challenge patents.Second, the settlements are anticompetitive, serving as a form of marketdivision, which is the practical result when brands pay generics to dropchallenges to weak patents and delay entering the market instead.Third, the mere fact of a patent cannot justify the payments. The PatentOffice frequently issues invalid patents, and the patents at the heart ofthese settlements present concern, often covering not the drug’s activeingredient but narrower aspects like the formulation or meth...
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JAMA, Jun 12, 2018
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Journal of Commercial Biotechnology
One of the most pressing issues in antitrust law involves “product hopping.” A brand-name pharmac... more One of the most pressing issues in antitrust law involves “product hopping.” A brand-name pharmaceutical company switches from one version of a drug (say, capsule) to another (say, tablet). The concern with this conduct is that some of these switches offer only a trivial medical benefit but significantly impair generic competition.The antitrust analysis of product hopping is nuanced. In the U.S., it implicates the intersection of antitrust law, patent law, the Hatch-Waxman Act, and state drug product selection laws. In fact, the behavior is even more complex because it involves uniquely complicated markets characterized by buyers (insurance companies, patients) who are different from the decision-makers (physicians).This article introduces the relevant U.S. laws and regulatory frameworks before exploring the five litigated cases.
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In the Innovatio litigation, Judge James Holderman of the U.S. District Court for the Northern Di... more In the Innovatio litigation, Judge James Holderman of the U.S. District Court for the Northern District of Illinois determined the royalty a patentee could obtain after promising to license its patent on reasonable and nondiscriminatory (RAND) terms. Innovatio’s patents related to the 802.11 WiFi standard, which allows wireless devices such as routers, laptops, and cell phones to communicate with one another.This short article begins by describing how the Innovatio decision adopted a modified Georgia-Pacific framework focusing on the importance of the patent portfolio to the standard and the product, as well as comparable licenses. It explains how the court adopted a "Top Down" approach that (1) starts with the price of a WiFi chip, (2) calculates the average profit a chipmaker earns on the sale of each chip, and (3) multiplies the profit by the percentage of standard-essential patents owned by Innovatio. And it describes Judge Holderman's finding that Innovatio’s patents relating to the 802.11 standard were of "moderate" to "moderate-high" significance and resulted in a royalty rate of 9.56 cents per chip.Together with Judge James Robart’s opinion in Microsoft v. Motorola Mobility, the Innovatio decision articulates a comprehensive framework for determining RAND royalty rates. As these issues continue to reach the courts, the task will become incrementally easier as the number of RAND licenses on the public record increases, providing more data points for comparison.
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Papers by Michael Carrier