Is Big Pharma Violating Antitrust Law?
Duane Oyen remarks:
Prof. Epstein has done a lot of consulting work for pharmas (he did a good EconTalk show on it that dealt a bit with IP issues). I'd like to see him comment on "pay for delay" where big pharmas pay off generic providers to forego generic sales preparation for patented drugs. FTC thinks it is restraint of trade,... most courts don't. It certainly doesn't belong in the DoD Appropriation, of course.
The correct approach for this question, Duane, is to avoid all per se rules. The way you put the issue, a payment to delay entry is in fact an antitrust violation if that is all there is to it. It is a division of markets where the incumbent pays the generic to stay out.
Precisely because this naked division is illegal, we don't see it. What we tend to see are arrangements where there is some genuine disagreement as to whether the generic is entitled ti enter before the patent has expired. One way to resolve that dispute is to split the difference, so that the generic gets to come in one year earlier but not two. That now looks more like a legitimate settlement. But it could easily be a shield for the antitrust violation, which means that some degree of judicial oversight is needed to monitor the situation. But I think that the FTA goes overboard to condemn all these arrangements all the time.
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Jun '10
Re: Is Big Pharma Violating Antitrust Law?
Big Pharma is obviously interested in protecting its product by shielding it from competition, and that likely near the end of its patent term after it has recovered development costs. Could the same argument be made if Big Pharma slashed its price to keep the competition out? I recognize this is not something Big Pharma necessarily wants to do, but could the DOJ make the argument that a price cut at this point might be practice in restraint of trade?
May '10
Re: Is Big Pharma Violating Antitrust Law?
What do anti-trust laws declare? They are - surprise, surprise - vague and ambiguous, so I gather it would not be difficult to charge and successfully prosecute a random company with violating an anti-trust statute. According to Ayn Rand,
"The Antitrust laws—an unenforceable, uncompliable, unjudicable mess of contradictions—have for decades kept American businessmen under a silent, growing reign of terror...Under the Antitrust laws, a man becomes a criminal from the moment he goes into business, no matter what he does. For instance, if he charges prices which some bureaucrats judge as too high, he can be prosecuted for monopoly or for a successful “intent to monopolize”; if he charges prices lower than those of his competitors, he can be prosecuted for “unfair competition” or “restraint of trade”; and if he charges the same prices as his competitors, he can be prosecuted for “collusion” or “conspiracy.” There is only one difference in the legal treatment accorded to a criminal or to a businessman: the criminal’s rights are protected much more securely and objectively than the businessman’s.