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.

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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.