Impact of Reverse Exclusionary Settlements on Consumer Welfare : A Law and Economic Analysis

The purpose of this article is to propose a more accurate methodology and valuation as to the consumer welfare effect of reverse exclusionary settlements in the context of patent litigation cases between brand and generic pharmaceutical firms. In contrast to the FTC Findings that reverse exclusionary settlements will cost consumers $3.5 billion per year, our counter-analysis suggests that the costs to consumers are significantly less than what the FTC has estimated. Therefore, the dis-allowance of all reverse exclusionary settlements arguably is too restrictive a standard and may have unfavorable competitive consequences for consumers, as well as brand and generic pharmaceutical firms