US: 'Pay to delay' generic drugs can be illegal (Update)

June 17, 2013 by Jesse J. Holland

The Supreme Court ruled Monday that deals between pharmaceutical corporations and their generic drug competitors, which government officials say keep cheaper forms of medicine off the market, can be sometimes be illegal and therefore challenged in court.

The justices voted 5-3 to allow the government to inspect and challenge what it calls "pay-for-delay" deals or "reverse payment settlements."

"This court's precedents make clear that patent-related settlement agreements can sometimes violate anti-trust law," said Justice Stephen Breyer, who wrote the court's opinion.

Reverse payment settlements arise when generic companies file a challenge at the Food and Drug Administration to the patents that give brand-name drugs a 20-year monopoly. The generic drugmakers aim to prove the patent is flawed or otherwise invalid, so they can launch a generic version well before the patent ends.

Brand-name drugmakers then usually sue the generic companies, which sets up what could be years of expensive litigation. When the two sides aren't certain who will win, they often reach a compromise deal that allows the generic company to sell its cheaper copycat drug in a few years—but years before the drug's patent would expire. Often, that settlement comes with a sizable payment from the brand-name company to the generic drugmaker.

Drugmakers say the settlements protect their interests but also benefit consumers by bringing inexpensive copycat medicines to market years earlier than they would arrive in any case generic drugmakers took to trial and lost. But federal officials counter that such deals add billions to the drug bills of American patients and taxpayers, compared with what would happen if the generic companies won the lawsuits and could begin marketing right away.

"This decision makes clear that drug companies can be sued to stop anticompetitive pay-for-delay agreements,' said New York Attorney General Eric T. Schneiderman. " It will be an important weapon in the fight for affordable drug prices and quality healthcare for every citizen."

But Steve Reed, a lawyer at Morgan, Lewis & Bockius LLP, said the decision could delay the entry of generics into the market.

Chief Justice John Roberts, who wrote the dissent for himself and Justices Antonin Scalia and Clarence Thomas, said ordinarily the high court would say that any deal that would end costly and time-consuming litigation would be thought of as a good thing.

"The majority's rule will discourage settlement of patent litigation," Roberts said. "Simply put, there would be no incentive to settle if, immediately after setting, the parties would have to litigate the same issue—the question of patent validity—as part of a defense against an antitrust suit."

The Justice Department asked the court to rule that all reverse payment settlements were illegal, but Breyer said that was going too far. The deals' "complexities lead us to conclude that the FTC must prove its case," he said.

Justice Samuel Alito did not take part in the case.

The case is Federal Trade Commission vs. Actavis, Inc., 12-416.

Explore further: High court weighs drug companies' generics policy

Related Stories

High court weighs drug companies' generics policy

March 25, 2013
(AP)—The Supreme Court is struggling with whether it should stop pharmaceutical corporations from paying generic drug competitors to delay releasing their cheaper versions of brand-name drugs.

Court: Can drug companies pay to delay generics?

March 24, 2013
(AP)—Federal regulators are pressing the Supreme Court to stop big pharmaceutical corporations from paying generic drug competitors to delay releasing their cheaper versions of brand-name drugs. They argue these deals deny ...

UK alleges GSK paid off competitors to delay drugs

April 19, 2013
Britain's competition watchdog accused GlaxoSmithKline on Friday of paying off competitors to delay launches of their own versions of GSK's best-selling antidepressant, Seroxat.

Pfizer settles Protonix patent case for $2.15B

June 12, 2013
Two generic drugmakers will pay $2.15 billion to Pfizer and Takeda Pharmaceutical to settle a patent fight over the heartburn treatment Protonix.

Court: Can generic drug maker be sued over design?

March 19, 2013
The Supreme Court will soon decide whether generic drug manufacturers can be sued in state court for a drug's design defects after federal officials approved the brand-name version.

Court: Can generic makers be sued for drug flaws?

November 30, 2012
(AP)—The Supreme Court will decide whether generic drug manufacturers can be held responsible in state courts for possible design defects that are in the brand-name medicine they are copying.

Recommended for you

In most surgery patients, length of opioid prescription, number of refills spell highest risk for misuse

January 17, 2018
The possible link between physicians' opioid prescription patterns and subsequent abuse has occupied the attention of a nation in the throes of an opioid crisis looking for ways to stem what experts have dubbed an epidemic. ...

Patients receive most opioids at the doctor's office, not the ER

January 16, 2018
Around the country, state legislatures and hospitals have tightened emergency room prescribing guidelines for opioids to curb the addiction epidemic, but a new USC study shows that approach diverts attention from the main ...

FDA bans use of opioid-containing cough meds by kids

January 12, 2018
(HealthDay)—Trying to put a dent in the ongoing opioid addiction crisis, the U.S. Food and Drug Administration on Thursday slapped strict new restrictions on the use of opioid-containing cold and cough products by kids.

Taking ibuprofen for long periods found to alter human testicular physiology

January 9, 2018
A team of researchers from Denmark and France has found that taking regular doses of the pain reliever ibuprofen over a long period of time can lead to a disorder in men called compensated hypogonadism. In their paper published ...

Nearly one-third of Canadians have used opioids: study

January 9, 2018
Nearly one in three Canadians (29 percent) have used "some form of opioids" in the past five years, according to data released Tuesday as widespread fentanyl overdoses continue to kill.

Growing opioid epidemic forcing more children into foster care

January 8, 2018
The opioid epidemic has become so severe it's considered a national public health emergency. Addiction to prescription painkillers, such as oxycodone and morphine, has contributed to a dramatic rise in overdose deaths and ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.