Settlement

• Author: Kenneth Dorsney
• Pages: 277-291

277

chapter 12

Settlement1

I. Introduction

The litigation practices described throughout this book carry significant

risks for all parties involved. Brand-name drug manufacturers run the risk

that their patents may be declared invalid, unenforceable, or not infringed,

which could potentially open the door for generic competitors, deplete their

market, and eliminate revenue for funding additional research projects.

Generic drug companies run the risk that they could be found to infringe

a valid patent, delaying their entry into their intended market until the

expiration of the patent, eliminating their competitive advantage, and sig-

nificantly reducing their prospective revenue. Moreover, brand-name and

generic drug manufacturers alike must endure the burden of allocating

large amounts of corporate resources to the litigation, including both time

and capital, which could be directed to other activities. For these reasons,

and for the sake of efficiency, Abbreviated New Drug Application (ANDA)

litigation frequently ends in settlement. This chapter explores the forms

of settlement in ANDA litigation and the factors parties should consider.

II. Frequency of Settlement

From 1992 to 2000, approximately 40 percent of all ANDA litigations

ended in settlement.2 Since that time, settlement of ANDA litigation

has become even more prevalent. In 2011, the Federal Trade Commis-

sion (FTC) indicated that the number of ANDA settlements has doubled

1. Michael V. O’Shaughnessy and Cora R. Holt, Finnegan, Henderson, Farabow,

Garrett & Dunner, LLP.

2. See FTC, GENERIC DRUG ENTRY PRIOR TO PATENT EXPIRATION: AN FTC STUDY, at 27

(2002), available at http://www.ftc.gov/os/2002/07/genericdrugstudy.pdf.