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As the winter months approached, a storm was brewing in the antitrust world. The U.S. Courts of Appeals for the Sixth and Eleventh circuits have split over the per se illegality of Hatch-Waxman patent-settlement agreements by which a patent-holding drug maker pays a generic drug company to delay its entry into the market. The Federal Trade Commission (FTC) has harshly criticized these agreements, and now the Supreme Court has an opportunity to calm the fury.
The Issue
At the heart of the storm lies the following question: When does a patent-holding drug company step beyond the bounds of the legal monopoly granted by its patent and into the realm of per se antitrust liability? The Hatch-Waxman Act sets the background for the two circuit court cases. In 1984, Congress passed the Hatch-Waxman Act, formally known as the Drug Price Competition and Patent Term Restoration Act (21 USC ' 355) with the express purpose of “mak[ing] available more low-cost generic drugs.” H.R. Rep. No. 98-857, pt.1, at 14-15 (1984), reprinted in 1984 USCCAN 2647. The Hatch-Waxman Act establishes a special FDA approval procedure for generic drug companies. The generic must file an Abbreviated New Drug Application (ANDA) and certify that its generic drug will not infringe any existing patent (a “paragraph IV certification”). The act also provides a 180-day exclusive marketing period to the first company to file an application with the FDA for a particular generic drug.
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