Last updated March 27, 2024

ICLE Affiliate Review: April 2024

An occasional review of ICLE's Academic Affiliate network


2024 has gotten off to quite a start: new merger guidelines, the European Union’s Digital Markets Act is in full effect, Apple has joined Amazon, Google, and Meta as targets of federal antitrust suits, the Supreme Court has heard cases that might reshape the Internet, the First Amendment, and administrative law, just to name a few highlights. And things have been busy for ICLE and our academic affiliates, as well. We share some news and highlights of our affiliates’ recent activity below.

There are a few items we want to draw special attention to:

  • We have open calls for research funding for projects relating to a range of topics, from corporate healthcare markets to AI & competition, vertical integration, and labor markets. Funding for these projects typically ranges from $10,000-$50,000.
  • We are excited to announce the call for proposals to support a second year of law & economics speakers series. We hope to award 4-6 grants to our affiliates to support their hosting guest speakers series at their schools during the 2024-25 academic year.
  • Be on the lookout for details about our 2024 L&E Research Award. We will be soliciting nominations for best recent published Law & Economics research by both junior and established scholars, as well as for other initiatives, for awards to be announced later this year.

Read on for more details about these programs, as well as updates about all of the great work that our affiliates have been up to over the past few months.


2024-2025 Research Funding Opportunities

We are always looking for opportunities to support our affiliates’ research. This includes having grant funding available to support work with the potential to impact public policy. Research awards may be as high as $50,000, and can include support for data, research support, teaching buyouts, and simple honoraria and salary support. We may also be able to provide additional assistance with obtaining data or making contacts in industry or government.

As an example of potential topics, in the coming year we hope to support work on topics including:

  • Corporate practice of medicine, including comparative studies of waste, fraud, and abuse, or generally the quality of management, in corporately-operated vs. traditional medical practices.
  • Empirical studies of labor practices, including studies of labor monopsony and employee outcomes in increasingly-automated industries.
  • Studies (especially empirical) relating to ongoing antitrust and competition regulation (including litigation) in the United States and around the world.
  • Contemporary industrial organization topics, including empirical studies of vertical integration, conglomerate and ecosystem antitrust, and the effects of recent regulatory interventions.
  • Topics relating to AI and competition, including exploration of concerns that AI and similar technology platforms might facilitate collusion or other anticompetitive conduct and ways that such platforms might instead facilitate competitive outcomes.

This list is not exhaustive–we welcome proposals on any topic related to ICLE’s core subject areas. If you are interested in discussing potential research support, please reach out to share details about your proposed work.

Inquiries should be sent to [email protected].

2024-2025 Speaker Series Call for Proposals

ICLE is excited to announce its second year of Speakers Series Grants to support law & economics scholarship on campus. These grants allow recipients to bring several speakers to their campus over the course of the academic year to present current scholarship.

In evaluating proposals for the 2024-2025 academic year, we will place special emphasis on bringing new voices into the law & economics community, including both more junior scholars and scholars from cognate disciplines such as business and engineering. Typical awards are $10,000. See the call for proposals below for more information.

For more information, details are available here.

Call for Chapter Contributions: Conglomerate and Ecosystem Antitrust

We are working on an edited volume of essays about contemporary issues in conglomerate and ecosystem antitrust, to be published by Cambridge University Press in early 2025. We welcome expressions of interest from authors who would like to contribute a chapter for consideration in this volume. Authors will be expected to submit a complete draft by August 31 and to participate in a closed-door roundtable or public-facing event in the fall.

Law & Economics Paper and Initiative Awards

Nominations are open for our 2024 Law & Economics Paper and Initiative Awards. This year we will offer three cash prizes: Best Law & Economics Paper by a Junior Scholar; Best Law & Economics Paper; and Best Law & Economics Initiative. Nominations for any category may be made by any ICLE affiliate; prizes will be announced in late July.

Be on the lookout for more information about these awards, including nomination instructions and eligibility criteria!

Monthly Workshop and Slack Discussion Channel

Last year, ICLE began hosting a monthly discussion workshop for its academic affiliates and extended network, including participants of past ICLE programs. If you do not already have access to this Slack channel and would like to join, please reach out to us at [email protected] for more information.The workshop will meet online for two hours one afternoon each month and is an opportunity to informally gather with colleagues from the network and discuss a prompt relating to contemporary issues in law, economics, business, and public policy and to share news of your own research endeavors to find potential partners or peer review. Participants will have the opportunity to join a community of scholars in an online forum via Slack, where you can more regularly stay connected.


ICLE’s affiliates are an impressive group, producing more output than can reasonably be reported here. Highlights of your work from the past few months are listed below. If you have recent upcoming work, you would like to share let us know.

Will AI Make Law Productive?

This is my third and final installment summarizing the arguments in my draft article The Cost of Justice at the Dawn of AI. In the first, I reviewed Baumol’s cost disease’s implications for the legal sector. Baumol recognized that if the productivity of any sector improved less than the productivity of the economy as a whole, the goods or services from that sector would become more expensive. In the second, I assessed whether the legal sector has stagnated in this way. This turns out to be difficult or impossible to measure conclusively, because it’s hard to assess whether legal work is improving in quality. But crude measures like consumer price indices suggest stagnation. Rapidly decreasing trial rates provide further evidence. It should not be surprising that fewer cases, civil and criminal, make it to trial if legal process is getting more expensive.

Popular Media

How a Recent California Appellate Court Decision Will Chill Drug Development, Raise Pharmaceutical Costs

When we are sick or in pain, we need relief. We know available prescription drugs won’t always be perfect. They sometimes have side effects. But we are grateful for even imperfect relief as an alternative to perfect pain.

Pharmaceutical companies aim to identify good drugs and get them to market, while constantly returning to the lab to innovate and make them even better, working to get the next version closer to perfect and with fewer side effects. But, thanks to a recent decision by a California appellate court, the incentives to develop new drugs and innovate to find even better alternatives may be over. California may have permanently impeded all pharmaceutical innovation by holding that a drug company can be sued for bringing two safe drugs to market, but not discovering the better one first. If a new court decision holds, these companies can be punished unless they bring no drug until they find the perfect drug.

Read the full piece here.

Popular Media

How Epic v. Apple Operationalizes Ohio v. Amex


The Supreme Court’s landmark decision in Ohio v. American Express (“Amex”) remains central to the enforcement of antitrust laws involving digital markets. Specifically, the decision established a framework to assess business conduct involving transactional, multisided platforms from both an economic and legal perspective. At its crux, the Court in Amex integrated both the relevant market and competitive effects analysis across the two distinct groups who interact on the Amex platform, that is, cardholders and merchants. This unified, integrated approach has been controversial, however. The primary debate is whether the Court’s ruling places an undue burden on plaintiffs under the rule of reason paradigm to meet its burden of production to establish harm to competition. Enter Epic v. Apple (“Epic”): a case involving the legality of various Apple policies governing its iOS App Store, which, like Amex, is a transactional, multisided platform. While both the district court and the Ninth Circuit largely ruled in favor of Apple over Epic, these decisions are of broader interest for their fidelity to Amex. A careful review of the decisions reveals that the Epic courts operationalized Amex in a practical, sensible way. The courts did not engage in extensive balancing across developers and users as some critics of Amex contended would be required. Ultimately, the courts in Epic (a) considered evidence of effects across both groups on the platform and (b) gave equal weight to both the procompetitive and anticompetitive effects evidence, which, this Article contends, are the essential elements of the Amex precedent. Relatedly, the Epic decisions illustrate that the burden of production on plaintiffs in multisided platform cases is not higher than in cases involving regular, single-sided markets. Additionally, both parties, whether litigating single-sided or multi-sided markets, are fully incentivized to bring evidence to bear on all aspects of the case. Finally, this Article details how the integrated Amex approach deftly avoids potential issues involving the out-of-market effects doctrine in antitrust, which limits what type of effects courts can consider in assessing conduct.

Read at SSRN.


The Attenuation of Legal Change


This chapter contributes to the literature on legal transition by offering a perspective on the “attenuation policy.” The attenuation policy invites the lawmaker to adjust its decisions to the contingent status of the parties, which might be favorable (high benefits/low costs) or unfavorable (small benefits/high costs). The attenuation policy provides parties with insurance, with a negligible impact on efficiency. The chapter puts the attenuation policy in perspective and compares it to other transition tools.


Competitive Effects of T-Mobile/Sprint: Analysis of a ‘4-to-3’ Merger


Mergers in mobile markets are of keen interest to policy makers and scholars. Because carrier networks are subject to pronounced economies of scale and scope and given that communications regulators create substantial barriers to entry by limiting spectrum allocations for mobile services, wireless services generally exhibit relatively high levels of industrial concentration. Hence, antitrust authorities often struggle with the tradeoff between enhanced scale economies and enhanced market power. Between 2012 to 2016, for instance, four E.U. nations (Austria, Ireland, Germany, and Italy) consummated “4-to-3” mobile mergers while two such combinations were blocked (in Denmark and the U.K.). In the U.S., 4-to-3 transactions were blocked by regulators in 2011 and again in 2014, but a recent merger — between the No. 3 (T-Mobile) and No. 4 (Sprint) carriers was approved in February 2020. This combination remains a subject of intense debate. We examine post-merger evidence of retail mobile subscription prices, network investment, service quality, market shares, and industry profits in the U.S. mobile communications industry. We conclude that the data are consistent with the thesis that the T-Mobile/Sprint merger produced consumer gains. This outcome is particularly interesting given that the government remedy imposed to mitigate potential anti-competitive merger effects, the creation of a new fourth network (DISH), has produced no plausible pro-competitive impact.


Congress Should Protect the Rights of American Creators with Site-Blocking Legislation


Large-scale piracy websites violate the copyrights of American creators and threaten the continued growth of the creative industries. The 1998 Digital Millennium Copyright Act is ineffective in stopping this scourge, as its protections are limited to obsolete technologies and it does not apply to piracy websites based in foreign countries. Congress should protect the rights of American creators on the 21st-century internet by enacting site-blocking legislation. Many U.S. allies already have site-blocking laws. A decade of studies and data from the operation of these site-blocking laws have proven these laws work without chilling speech or “breaking the internet.” Site-blocking laws are a proven, effective mechanism in protecting copyrights and promoting legitimate online commercial services.

Lynne Kiesling on the Economics of Energy

ICLE Academic Affiliate Lynne Kiesling was a guest on the The Answer Is Transaction Costs podcast to discuss distributed energy resources (DERs) and the complex regulatory frameworks that shape smart-grid technologies. The full episode is embedded below.

Presentations & Interviews

Affiliates in the News

Several of our affiliates have been published or quoted in news outlets over the last few months. Here are just a few:

Todd Zywicki, Geoffrey Manne, & Julian Morris on the Durbin Amendment

ICLE President Geoff Manne, Senior Scholar Julian Morris, and Nonresident Scholar Todd Zywicki were cited by Regulation in a story about the history of the Durbin amendment. You can read the full piece here.

Other studies have found that, despite possible short??run savings to merchants, the interchange fee cap regulation had an adverse effect on consumers. A 2014 Mercatus Center working paper by Todd Zywicki, Geoffrey Manne, and Julian Morris estimated that the interchange fee cap led to an increase of $22.8 billion in annual costs for consumers, resulting mainly from higher fees on bank accounts, such as monthly maintenance fees, overdraft fees, and ATM fees. They found that the regulation reduced the availability of free checking accounts by 50 percent and increased minimum balance requirements by 23 percent. Moreover, the regulation reduced incentives for card issuers to offer user rewards and benefits such as cash back, points, and discounts. They also found that some issuers reduced the issuance of debit cards, especially to low??income and unbanked consumers, who are more likely to use debit cards for small??value transactions.

Jonah Gelbach on PACER

ICLE Academic Affiliate Jonah Gelbach was cited by Berkeley Law in a story that mentions his course on Public Access to Court Electronic Records. You can read the full piece here.

3L Chloe Pan took Professor Jonah Gelbach’s Public Access to Court Electronic Records course because she was interested in thinking about how courts operate as public institutions. Named for the online repository of more than 1 billion federal court records — commonly referred to with the PACER acronym — the course’s main focus is the legislative and litigation activity aimed at dropping the paywall for non-parties to access information.

“Law school classes typically focus on the substantive content of litigation, but there are fewer opportunities to examine how litigation is administered and how judicial procedures could be improved,” Pan says.

Gelbach’s past and current scholarship has outlined some downsides(opens in a new tab) of the paywall, particularly its impact on researchers who want to look at trends in the judicial sector using aggregated data.

“Our courts have enormous amounts of data that could be used to better understand, operate, and design our judicial system, yet the data remains largely locked behind a paywall that stunts research and journalistic access,” he says. “I wanted to teach this course because I wanted to help students explore the arguments for and against reforming that situation.”

Richard Langlois on the Value of Economics

ICLE Academic Affiliate Richard Langlois was profiled in a Q&A post from UConn Today about his recent selection as head of University of Connecticut’s economics department. You can read full piece here.

We are a collegial, friendly department where people look out for each other, and I’m very grateful for that. From that starting point I want to build up our resources to better serve our undergraduates, since we have one of the most popular majors at UConn. Competition is intense for very good faculty, but we have a strong program, and we are hoping to add faculty to improve the student experience and to raise our research profile.

Liad Wagman on RPI’s Management School

ICLE Academic Affiliate Liad Wagman was profiled in a piece from The Troy Record about his recent selection as dean of Rensselaer Polytechnic Institute’s Lally School of Management. You can read full piece here.

“I am deeply honored to have been chosen to lead a community dedicated to the fusion of management, finance, analytics, and technology,” Wagman said in the release. “Together, we will cultivate leaders and professionals who are capable of navigating the complexities of a rapidly evolving global business landscape, driven by data, innovation, and a commitment to ethical leadership and positive societal impact. I am excited about the opportunity to serve Rensselaer’s Lally School of Management and to work with Lally’s world-class team and community of faculty, staff, students, alumni, advisers, university partners, and friends to promote innovation and excellence in research and business education that best prepare students for success.”

Joanna Shepherd on Judicial Elections

ICLE Nonresident Scholar Joanna Shepherd was cited in a story in The Journalist’s Resource about her research on the role of campaign finance in judicial elections. You can read the full piece here.

The groups and individuals funding candidates’ races can say a lot about the candidates themselves and can even influence decisions, Keith says. To learn more, Keith recommends the research of Michael Kang at Northwestern University and Joanna Shepherd at Emory University, collected in their 2023 book Free to Judge: The Power of Campaign Money in Judicial Elections.

Liya Palagashvili on California’s AB5

ICLE Academic Affiliate Liya Palagashvili was cited by The New York Post in a story about California’s A.B. 5 legislation. You can read full piece here.

New research led by Mercatus Center economist Liya Palagashvili quantifies the damage that the California Assembly and Governor Gavin Newsom did to their workforce with AB5.

Self-employment fell by 10.5%, and overall employment fell by 4.4%, especially in occupations overrepresented by self-employed workers.

Also, it found no robust evidence that reclassified workers were ultimately hired by their clients as employees, refuting that common pushback.

Hongbin Cai on Hong Kong Economic Conference

ICLE Academic Affiliate Hongbin Cai was quoted by Taiwan News in a story about the upcoming “Future Hong Kong Economy” conference. You can read full piece here.

Professor Hongbin Cai, Dean and Chair of Economics of HKU Business School said ‘HKU Business School has been dedicated to conducting economic policy research for many years, aiming to contribute to the sustainable development of Hong Kong’s economy. To cope with the future challenges of Hong Kong, society needs to focus on vision, policies, housing, and land. This year’s Green Paper and conference have achieved remarkable results, receiving enthusiastic feedback from participants and affirming their value and impact.’

Affiliates on the Move

Congratulations to ICLE affiliates for the following professional moves!

Yunsieg P. Kim to join Hofstra University School of Law from the University of Missouri in fall 2024

Lynne Kiesling named the Public Choice Society’s president for 2024. Congratulations, Lynne, on a successful 61st Annual Meeting in Dallas, TX in March!

Richard N. Langlois named Head of Economics at the University of Connecticut

Liad Wagman named Dean of Lally School of Management at Rensselaer Polytechnic Institute

If you have any news of your own to share with ICLE, please do so by emailing [email protected].


ICLE-Affiliate Collaboration

ICLE was happy to collaborate with our affiliates on a various projects over the last few months.

ICLE Amicus in RE: Gilead Tenofovir Cases

Dear Justice Guerrero and Associate Justices,

In accordance with California Rule of Court 8.500(g), we are writing to urge the Court to grant the Petition for Review filed by Petitioner Gilead Sciences, Inc. (“Petitioner” or “Gilead”) on February 21, 2024, in the above-captioned matter.

We agree with Petitioner that the Court of Appeal’s finding of a duty of reasonable care in this case “is such a seismic change in the law and so fundamentally wrong, with such grave consequences, that this Court’s review is imperative.” (Pet. 6.) The unprecedented duty of care put forward by the Court of Appeal—requiring prescription drug manufacturers to exercise reasonable care toward users of a current drug when deciding when to bring a new drug to market (Op. 11)—would have far-reaching, harmful implications for innovation that the Court of Appeal failed properly to weigh.

If upheld, this new duty of care would significantly disincentivize pharmaceutical innovation by allowing juries to second-guess complex scientific and business decisions about which potential drugs to prioritize and when to bring them to market. The threat of massive liability simply for not developing a drug sooner would make companies reluctant to invest the immense resources needed to bring new treatments to patients. Perversely, this would deprive the public of lifesaving and less costly new medicines. And the prospective harm from the Court of Appeal’s decision is not limited only to the pharmaceutical industry.

We urge the Court to grant the Petition for Review and to hold that innovative firms do not owe the users of current products a “duty to innovate” or a “duty to market”—that is, that firms cannot be held liable to users of a current product for development or commercialization decisions on the basis that those decisions could have facilitated the introduction of a less harmful, alternative product.

Interest of Amicus Curiae

The International Center for Law & Economics (“ICLE”) is a nonprofit, non-partisan global research and policy center aimed at building the intellectual foundations for sensible, economically grounded policy. ICLE promotes the use of law and economics methodologies and economic learning to inform policy debates. It also has longstanding expertise in evaluating law and policy relating to innovation and the legal environment facing commercial activity. In this letter, we wish to briefly highlight some of the crucial considerations concerning the effect on innovation incentives that we believe would arise from the Court of Appeal’s ruling in this case.[1]

The Court of Appeal’s Duty of Care Standard Would Impose Liability Without Requiring Actual “Harm”

The Court of Appeal’s ruling marks an unwarranted departure from decades of products-liability law requiring plaintiffs to prove that the product that injured them was defective. Expanding liability to products never even sold is an unprecedented, unprincipled, and dangerous approach to product liability. Plaintiffs’ lawyers may seek to apply this new theory to many other beneficial products, arguing manufacturers should have sold a superior alternative sooner. This would wreak havoc on innovation across industries.

California Civil Code § 1714 does not impose liability for “fail[ing] to take positive steps to benefit others,” (Brown v. USA Taekwondo (2021) 11 Cal.5th 204, 215), and Plaintiffs did not press a theory that the medicine they received was defective. Moreover, the product included all the warnings required by federal and state law. Thus, Plaintiffs’ case—as accepted by the Court of Appeal—is that they consumed a product authorized by the FDA, that they were fully aware of its potential side effects, but maybe they would have had fewer side effects had Gilead made the decision to accelerate (against some indefinite baseline) the development of an alternative medicine. To call this a speculative harm is an understatement, and to dismiss Gilead’s conduct as unreasonable because motivated by a crass profit motive, (Op. at 32), elides many complicated facts that belie such a facile assertion.

A focus on the narrow question of profits for a particular drug misunderstands the inordinate complexity of pharmaceutical development and risks seriously impeding the rate of drug development overall. Doing so

[over-emphasizes] the recapture of “excess” profits on the relatively few highly profitable products without taking into account failures or limping successes experienced on the much larger number of other entries. If profits were held to “reasonable” levels on blockbuster drugs, aggregate profits would almost surely be insufficient to sustain a high rate of technological progress. . . . If in addition developing a blockbuster is riskier than augmenting the assortment of already known molecules, the rate at which important new drugs appear could be retarded significantly. Assuming that important new drugs yield substantial consumers’ surplus untapped by their developers, consumers would lose along with the drug companies. Should a tradeoff be required between modestly excessive prices and profits versus retarded technical progress, it would be better to err on the side of excessive profits. (F. M. Scherer, Pricing, Profits, and Technological Progress in the Pharmaceutical Industry, 7 J. Econ. Persp. 97, 113 (1993)).

Indeed, Plaintiffs’ claim on this ground is essentially self-refuting. If the “superior” product they claim was withheld for “profit” reasons was indeed superior, then Plaintiffs could have expected to make a superior return on that product. Thus, Plaintiffs claim they were allegedly “harmed” by not having access to a product that Petitioners were not yet ready to market, even though Petitioners had every incentive to release a potentially successful alternative as soon as possible, subject to a complex host of scientific and business considerations affecting the timing of that decision.

Related, the Court of Appeal’s decision rests on the unfounded assumption that Petitioner “knew” TAF was safer than TDF after completing Phase I trials. This ignores the realities of the drug development process and the inherent uncertainty of obtaining FDA approval, even after promising early results. Passing Phase I trials, which typically involve a small number of healthy volunteers, is a far cry from having a marketable drug. According to the Biotechnology Innovation Organization, only 7.9% of drugs that enter Phase I trials ultimately obtain FDA approval.[2] (Biotechnology Innovation Organization, Clinical Development Success Rates and Contributing Factors 2011-2020, Fig. 8b (2021), available at Even after Phase II trials, which assess efficacy and side effects in a larger patient population, the success rate is only about 15.1%. (Id.) Thus, at the time Gilead decided to pause TAF development, it faced significant uncertainty about whether TAF would ever reach the market, let alone ultimately prove safer than TDF.

Moreover, the clock on Petitioner’s patent exclusivity for TAF was ticking throughout the development process. Had Petitioner “known” that TAF was a safer and more effective drug, it would have had every incentive to bring it to market as soon as possible to maximize the period of patent protection and the potential to recoup its investment. The fact that Petitioner instead chose to focus on TDF strongly suggests that it did not have the level of certainty the Court of Appeal attributed to it.

Although conventional wisdom has often held otherwise, economists generally dispute the notion that companies have an incentive to unilaterally suppress innovation for economic gain.

While rumors long have circulated about the suppression of a new technology capable of enabling automobiles to average 100 miles per gallon or some new device capable of generating electric power at a fraction of its current cost, it is rare to uncover cases where a worthwhile technology has been suppressed altogether. (John J. Flynn, Antitrust Policy, Innovation Efficiencies, and the Suppression of Technology, 66 Antitrust L.J. 487, 490 (1998)).

Calling such claims “folklore,” the economists Armen Alchian and William Allen note that, “if such a [technology] did exist, it could be made and sold at a price reflecting the value of [the new technology], a net profit to the owner.” (Armen A. Alchian & William R. Allen, Exchange & Production: Competition, Coordination, & Control (1983), at 292). Indeed, “even a monopolist typically will have an incentive to adopt an unambiguously superior technology.” (Joel M. Cohen and Arthur J. Burke, An Overview of the Antitrust Analysis of Suppression of Technology, 66 Antitrust L.J. 421, 429 n. 28 (1998)). While nominal suppression of technology can occur for a multitude of commercial and technological reasons, there is scant evidence that doing so coincides with harm to consumers, except where doing so affirmatively interferes with market competition under the antitrust laws—a claim not advanced here.

One reason the tort system is inapt for second-guessing commercial development and marketing decisions is that those decisions may be made for myriad reasons that do not map onto the specific safety concern of a products-liability action. For example, in the 1930s, AT&T abandoned the commercial development of magnetic recording “for ideological reasons. . . . Management feared that availability of recording devices would make customers less willing to use the telephone system and so undermine the concept of universal service.” (Mark Clark, Suppressing Innovation: Bell Laboratories and Magnetic Recording, 34 Tech. & Culture 516, 520-24 (1993)). One could easily imagine arguments that coupling telephones and recording devices would promote safety. But the determination of whether safety or universal service (and the avoidance of privacy invasion) was a “better” basis for deciding whether to pursue the innovation is not within the ambit of tort law (nor the capability of a products-liability jury). And yet, it would necessarily become so if the Court of Appeal’s decision were to stand.

A Proper Assessment of Public Policy Would Cut Strongly Against Adoption of the Court of Appeal’s Holding

The Court of Appeal notes that “a duty that placed manufacturers ‘under an endless obligation to pursue ever-better new products or improvements to existing products’ would be unworkable and unwarranted,” (Op. 10), yet avers that “plaintiffs are not asking us to recognize such a duty” because “their negligence claim is premised on Gilead’s possession of such an alternative in TAF; they complain of Gilead’s knowing and intentionally withholding such a treatment….” (Id).

From an economic standpoint, this is a distinction without a difference.

Both a “duty to invent” and a “duty to market” what is already invented would increase the cost of bringing any innovative product to market by saddling the developer with an expected additional (and unavoidable) obligation as a function of introducing the initial product, differing only perhaps by degree. Indeed, a “duty to invent” could conceivably be more socially desirable because in that case a firm could at least avoid liability by undertaking the process of discovering new products (a socially beneficial activity), whereas the “duty to market” espoused by the Court of Appeal would create only the opposite incentive—the incentive never to gain knowledge of a superior product on the basis of which liability might attach.[3]

And public policy is relevant. This Court in Brown v. Superior Court, (44 Cal. 3d 1049 (1988)), worried explicitly about the “[p]ublic policy” implications of excessive liability rules for the provision of lifesaving drugs. (Id. at 1063-65). As the Court in Brown explained, drug manufacturers “might be reluctant to undertake research programs to develop some pharmaceuticals that would prove beneficial or to distribute others that are available to be marketed, because of the fear of large adverse monetary judgments.” (Id. at 1063). The Court of Appeal agreed, noting that “the court’s decision [in Brown] was grounded in public policy concerns. Subjecting prescription drug manufacturers to strict liability for design defects, the court worried, might discourage drug development or inflate the cost of otherwise affordable drugs.” (Op. 29).

In rejecting the relevance of the argument here, however, the Court of Appeal (very briefly) argued a) that Brown espoused only a policy against burdening pharmaceutical companies with a duty stemming from unforeseeable harms, (Op. 49-50), and b) that the relevant cost here might be “some failed or wasted efforts,” but not a reduction in safety. (Op. 51).[4] Both of these claims are erroneous.

On the first, the legalistic distinction between foreseeable and unforeseeable harm was not, in fact, the determinative distinction in Brown. Rather, that distinction was relevant only because it maps onto the issue of incentives. In the face of unforeseeable, and thus unavoidable, harm, pharmaceutical companies would have severely diminished incentives to innovate. While foreseeable harms might also deter innovation by imposing some additional cost, these costs would be smaller, and avoidable or insurable, so that innovation could continue. To be sure, the Court wanted to ensure that the beneficial, risk-reduction effects of the tort system were not entirely removed from pharmaceutical companies. But that meant a policy decision that necessarily reduced the extent of tort-based risk optimization in favor of the manifest, countervailing benefit of relatively higher innovation incentives. That same calculus applies here, and it is this consideration, not the superficial question of foreseeability, that animated this Court in Brown.

On the second, the Court of Appeal inexplicably fails to acknowledge that the true cost of the imposition of excessive liability risk from a “duty to market” (or “duty to innovate”) is not limited to the expenditure of wasted resources, but the non-expenditure of any resources. The court’s contention appears to contemplate that such a duty would not remove a firm’s incentive to innovate entirely, although it might deter it slightly by increasing its expected cost. But economic incentives operate at the margin. Even if there remains some profit incentive to continue to innovate, the imposition of liability risk simply for the act of doing so would necessarily reduce the amount of innovation (in some cases, and especially for some smaller companies less able to bear the additional cost, to the point of deterring innovation entirely). But even this reduction in incentive is a harm. The fact that some innovation may still occur despite the imposition of considerable liability risk is not a defense of the imposition of that risk; rather, it is a reason to question its desirability, exactly as this Court did in Brown.

The Court of Appeal’s Decision Would Undermine Development of Lifesaving and Safer New Medicines

Innovation is a long-term, iterative process fraught with uncertainty. At the outset of research and development, it is impossible to know whether a potential new drug will ultimately prove superior to existing drugs. Most attempts at innovation fail to yield a marketable product, let alone one that is significantly safer or more effective than its predecessors. Deciding whether to pursue a particular line of research depends on weighing myriad factors, including the anticipated benefits of the new drug, the time and expense required to develop it, and its financial viability relative to existing products. Sometimes, potentially promising drug candidates are not pursued fully, even if theoretically “better” than existing drugs to some degree, because the expected benefits are not sufficient to justify the substantial costs and risks of development and commercialization.

If left to stand, the Court of Appeal’s decision would mean that whenever this stage of development is reached for a drug that may offer any safety improvement, the manufacturer will face potential liability for failing to bring that drug to market, regardless of the costs and risks involved in its development or the extent of the potential benefit. Such a rule would have severe unintended consequences that would stifle innovation.

First, by exposing manufacturers to liability on the basis of early-stage research that has not yet established a drug candidate’s safety and efficacy, the Court of Appeal’s rule would deter manufacturers from pursuing innovations in the first place. Drug research involves constant iteration, with most efforts failing and the potential benefits of success highly uncertain until late in the process. If any improvement, no matter how small or tentative, could trigger liability for failing to develop the new drug, manufacturers will be deterred from trying to innovate at all.

Second, such a rule would force manufacturers to direct scarce resources to developing and commercializing drugs that offer only small or incremental benefits because failing to do so would invite litigation. This would necessarily divert funds away from research into other potential drugs that could yield greater advancements. Further, as each small improvement is made, it reduces the relative potential benefit from, and therefore the incentive to undertake, further improvements. Rather than promoting innovation, the Court of Appeal’s decision would create incentives that favor small, incremental changes over larger, riskier leaps with the greatest potential to significantly advance patient welfare.

Third, and conversely, the Court of Appeal’s decision would set an unrealistic and dangerous standard of perfection for drug development. Pharmaceutical companies should not be expected to bring only the “safest” version of a drug to market, as this would drastically increase the time and cost of drug development and deprive patients of access to beneficial treatments in the meantime.

Fourth, the threat of liability would lead to inefficient and costly distortions in how businesses organize their research and development efforts. To minimize the risk of liability, manufacturers may avoid integrating ongoing research into existing product lines, instead keeping the processes separate unless and until a potential new technology is developed that offers benefits so substantial as to clearly warrant the costs and liability exposure of its development in the context of an existing drug line. Such an incentive would prevent potentially beneficial innovations from being pursued and would increase the costs of drug development.

Finally, the ruling would create perverse incentives that could actually discourage drug companies from developing and introducing safer alternative drugs. If bringing a safer drug to market later could be used as evidence that the first-generation drug was not safe enough, companies may choose not to invest in developing improved versions at all in order to avoid exposing themselves to liability. This would, of course, directly undermine the goal of increasing drug safety overall.

The Court of Appeal gave insufficient consideration to these severe policy consequences of the duty it recognized. A manufacturer’s decision when to bring a potentially safer drug to market involves complex trade-offs that courts are ill-equipped to second-guess—particularly in the limited context of a products-liability determination.


The Court of Appeal’s novel “duty to market” any known, less-harmful alternative to an existing product would deter innovation to the detriment of consumers. The Court of Appeal failed to consider how its decision would distort incentives in a way that harms the very patients the tort system is meant to protect. This Court should grant review to address these important legal and policy issues and to prevent this unprecedented expansion of tort liability from distorting manufacturers’ incentives to develop new and better products.

[1] No party or counsel for a party authored or paid for this amicus letter in whole or in part.

[2] It is important to note that this number varies with the kind of medicine involved, but across all categories of medicines there is a high likelihood of failure subsequent to Phase I trials.

[3] To the extent the concern is with disclosure of information regarding a potentially better product, that is properly a function of the patent system, which requires public disclosure of new ideas in exchange for the receipt of a patent. (See Brenner v. Manson, 383 U.S. 519, 533 (1966) (“one of the purposes of the patent system is to encourage dissemination of information concerning discoveries and inventions.”)). Of course, the patent system preserves innovation incentives despite the mandatory disclosure of information by conferring an exclusive right to the inventor to use the new knowledge. By contrast, using the tort system as an information-forcing device in this context would impose risks and costs on innovation without commensurate benefit, ensuring less, rather than more, innovation.

[4] The Court of Appeal makes a related argument when it claims that “the duty does not require manufacturers to perfect their drugs, but simply to act with reasonable care for the users of the existing drug when the manufacturer has developed an alternative that it knows is safer and at least equally efficacious. Manufacturers already engage in this type of innovation in the ordinary course of their business, and most plaintiffs would likely face a difficult road in establishing a breach of the duty of reasonable care.” (Op. at 52-3).

Amicus Brief

The 2023 Merger Guidelines: A Panel Discussion of the Product, the Process, and the Prognosis

To much fanfare and even more controversy, the Federal Trade Commission (FTC) and U.S. Justice Department (DOJ) Antitrust Division jointly released new draft merger guidelines in July 2023. In December 2023, after concluding their review of comments on the draft, the agencies published the final guidelines. The new guidelines appear—in the eyes of many—to be an improvement over the draft document, although there remains considerable disagreement regarding how much improvement, and many of the document’s basic policy statements remain controversial.

On Feb. 26, 2024, the International Center for Law & Economics (ICLE) convened a distinguished panel of academics, practitioners, and former FTC commissioners to bring informed legal and economic perspectives to bear on the question of what the agencies delivered and how courts and antitrust practitioners might apply this guidance.

Panelists included Bruce Kobayashi, the Paige V. and Henry N. Butler Chair in Law and Economics at George Mason University’s Antonin Scalia Law School; Kristen Limarzi, a partner in the antitrust and competition practice group at Gibson Dunn; former FTC Commissioner and Acting Chair Maureen Ohlhausen, now a partner with Wilson Sonsini; Diana Moss, vice president and director of competition policy at the Progressive Policy Institute; and fellow former FTC Commissioner Noah Phillips, now co-chair of the antitrust practice at Cravath. ICLE Senior Scholar Dan Gilman served as moderator.

Video of the full event is embedded below.

Presentations & Interviews

L&E Fellows Program

Our L&E Fellows program is a year-long series of online workshops through which faculty interested in teaching law & economics collaboratively work through a set of law & economics teaching materials. This program is intended both to support faculty interested in teaching law & economics and also to develop stronger relationships with potential research collaborators. 

  • Our 2024 program is currently underway. Participants include 16 academics from both law and economics disciplines.
  • The first two meetings were hosted in February and April 2024.

Recent Events

Upcoming events

WINIR 2024

ICLE affiliates may be interested in the upcoming WINIR Conference on Institutional Resilience & Recovery in September. ICLE Affiliate Dick Langlois acts as WINIR president.

For more information, see the event’s page here.

Big Ideas Workshop

ICLE will be hosting its first Big Ideas Workshop of 2024 May 9 & 10. This workshop will examine the writings of Benjamin Klein and Armen Alchian. Early- and mid-career scholars should expect an invitation to this workshop soon.

ICLE’s virtual Big Ideas Workshops bring together groups of early- and mid-career scholars to discuss important ideas in law & economics, with particular focus on competition policy. This initiative was created to facilitate the communication of key law & economics ideas in fresh and compelling ways (to students and other audiences outside the field).


If you have thoughts on how ICLE can improve this Academic Affiliates Review or you’re interested in discussing publication, grantmaking, or other opportunities with us, please reach out to Gus Hurwitz at [email protected]