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The Role Of Risk Aversion In Reverse-Payment Agreements

Law360 (May 31, 2019, 2:57 PM EDT) -- A reverse-payment agreement arises when a brand-name drug manufacturer provides consideration to a generic drug company to settle its patent litigation in exchange for the generic drug company’s agreement not to enter the market until a certain date. Such agreements, and whether they are anti-competitive, continue to generate many legal disputes and debates among economists and legal scholars.

In its Federal Trade Commission v. Actavis Inc. decision, the U.S. Supreme Court ruled that reverse payment agreements should be analyzed under the rule of reason (i.e., one must assess the competitive effects of reverse payment through a careful economic analysis).[1] One of...

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