US Supreme Court says patent settlement can "sometimes" be illegal

In a long awaited ruling in the USA, the US Supreme Court yesterday (June 17) ruled in the patent settlement litigation – or “pay-for-delay” case, in the case of Federal Trade Commission v Actavis Inc, voting by five to three that the FTC has the right to challenge such deals by brand-name drugmakers with generics companies, which are said to delay the advent of cheaper copy medicines coming to market, a situation long refuted by the originator companies, which claim that these accords actually speed the arrivals of generics.

However, the court, with Justice Samuel Alito recused, declined the FTC’s request to declare the deals to be presumed to be illegal. The US department of Justice had asked the Supreme Court to rule that all reverse settlements were illegal, but Justice Stephen Breyer, who wrote the court’s opinion, said that was going too far. “The deals' complexities lead us to conclude that the FTC must prove its case," he said, according to an Associated Press report.

Federal Trade Commission Chairwoman Edith Ramirez commented: “The Supreme Court’s decision is a significant victory for American consumers, American taxpayers, and free markets. The Court has made it clear that pay-for-delay agreements between brand and generic drug companies are subject to antitrust scrutiny, and it has rejected the attempt by branded and generic companies to effectively immunize these agreements from the antitrust laws.  With this finding, the Court has taken a big step toward addressing a problem that has cost Americans $3.5 billion a year in higher drug prices.”