Over the past decade, reverse payment settlements between brand-name and generic drug manufacturers has become one of the most controversial topics in the patent-law and health-care communities.
Reverse payment, also known as “pay-for-delay,” occurs when a patent drug owner offers a generic drug company a license or money to delay production of a generic drug for a specified time. This allows the patent owner to maintain longer market control. Although public policy generally encourages settlement, the Federal Trade Commission (FTC) maintains reverse payments are presumptively anticompetitive and cost consumers billions of dollars in increased health-care costs. Meanwhile, the circuit courts disagree over the legality of reverse payments and the standard of law that applies.
