Vol. 5 No. 2, Spring 2014; Pay-for-Delay and Interstate Commerce: Why Congress or the Supreme Court Must Take Action Opposing Reverse Payment Settlements

Abstract

A pay-for-delay drug settlement, also called a reverse payment settlement, occurs when a brand name pharmaceutical company agrees to pay the maker of a similar generic drug to delay the release of the generic drug into the stream of commerce, thereby allowing the brand name pharmaceutical company to eliminate competition for an extended period of time. These agreements allow both the brand name manufacturer and the generic manufacturer to profit immensely. These settlements cost the American public an estimated $3.5 billion per year. Further, reverse payment settlements on average prevent generic drugs from entering the stream of commerce for an additional seventeen months. As a result, the public is missing out on generic drugs that could be up to ninety percent cheaper than the brand name version. This Comment intends to show that reverse payment settlements are unduly burdensome on interstate commerce, and thus it is within the purview of Congress to regulate these types of agreements. First, this Comment will explore the statutory framework through which pay-for-delay settlements became prominent. Next, this Comment discusses the history of pay-for-delay litigation and the underlying patent and antitrust laws that courts have focused on in making their decisions. After the necessary background is established, this Comment explores the commerce clause of the United States Constitution and argues that pay-for-delay settlements are unduly burdensome on interstate commerce, and therefore, either Congress should illegalize the settlements through legislation or the Supreme Court should find them unconstitutional. Finally, the possible benefits of such legislation are discussed.