US Supreme Court agrees to review pay-for-delay generic deals

The US Supreme Court has agreed to a request by the Federal Trade Commission to look into the practice whereby originator drug companies pay would be generic copiers to to drop their patent challenges in exchange for an arranged date when they can start supply copy products once these have been approved by the Food and Drug Administration, often termed pay-for-delay patent settlements. The FTC estimates such “reverse payment” deals cost US consumers $3.5 billion a year.

In particular, the Supreme Court will to take up FTC vs Watson Pharmaceuticals, in which the 11th Circuit Court of Appeal rejected the government’s argument that the practice violated antitrust laws. The high court had previously rejected a petition for certiorari over the Third Circuit’s decision finding such agreements illegal. This noted that “patent litigation often results, threatening the pioneer’s monopoly and profits. Instead of rolling the dice and risking their monopoly profits in the infamously costly and notoriously unpredictable process of patent litigation, many patent-holding companies choose to settle lawsuits in order to preserve their patents and keep the monopoly profits flowing.”

More than 100 pharmaceutical companies, including drug majors such as Bayer, Bristol-Myers Squibb, Merck & Co, have struck such deals since 2005, and have been the subject of much criticism by FTC chairman Jon Leibowitz.