US Supreme Court to Hear Pay-for-Delay Case

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The US Supreme Court accepted an appeal by the Federal Trade Commission of a decision that upheld an arrangement of payments by Solvay Pharmaceuticals to generic drug companies to postpone introduction of generic versions of its branded testosterone-replacement drug.

The US Supreme Court agreed on Friday, Dec. 7, 2012, to hear a case that will decide whether brand-name drug companies may pay generic drug companies to delay introduction of lower-cost generic drugs. At the request of the Federal Trade Commission (FTC), the US Solicitor General petitioned the Supreme Court to review a federal appeals court ruling that upheld a “pay-for-delay” arrangement between Solvay Pharmaceuticals, now owned by Abbott Laboratories, and generic-drug makers, such as Watson Pharmaceuticals, Paddock Laboratories, and Par Pharmaceutical. A decision on the case of Federal Trade Commission v. Watson Pharmaceuticals Inc. et al. (No. 12-416) is expected by the end of June 2013.

The FTC filed a complaint in 2009 alleging that the companies violated antitrust laws when Solvay paid the generic firms in exchange for their agreement to abandon patent challenges and refrain from marketing a generic version of AndroGel until 2015, noted the FTC in an Oct. 4, 2012 press release. A district court dismissed the FTC complaint, and, in April 2012, the 11th US Circuit Court of Appeals also ruled against the FTC and upheld the arrangement.


Drug companies say the settlements, also known as reverse payments, are a legitimate way to settle patent disputes. The FTC, however, says that the arrangements hurt American consumers. Other court cases over the last several years have dealt with the pay-for-delay practice, and the Supreme Court ruling is anticipated to set a national standard.