Supreme Court to Hear Generic Settlement Cases

The Supreme Court will hear arguments in the case of “pay to delay” agreements between generic and brand-name drug manufacturers.

Articles appearing in The Wall Street Journal and on Politico.com stated that the nation’s highest court agreed on December 7, 2012, to consider 3 cases regarding patent settlements between generic and brand-name drug manufacturers. In each case, generic manufacturers agreed to delay a product release in exchange for the settlement amount.

The cases involved include Federal Trade Commission v. Watson Pharmaceuticals, which covers a generic version of Watson Pharmaceuticals’ AndroGel (testosterone topical). The case was originally heard in the 11th circuit court in Atlanta, where the court ruled that the patent did not violate antitrust laws as long as exclusivity rights were not extended beyond the patent expiration date. The other 2 cases were not directly identified by either source.

According to Politico, the case could be the “Obamacare” case of 2013. The Federal Trade Commission (FTC) has contested the settlements for several years, arguing that they are anticompetitive and increase costs for the consumer by keeping lower-priced drugs off the market.

“This is the health care reform case of 2013,” David Balto, a former FTC policy director, told Politico. “There’s no other case that can have as much impact on reducing health care costs.”

The FTC also argues that the settlements violate the Sherman Antitrust act, and, in 1 of the lawsuits, allowed the generic manufacturer to receive tens of millions of dollars by delaying a product release.

Pharmaceutical industry representatives maintain that the agreements are good for competition, however. The agreements allow generics to enter the market prior to a branded patient expiration while truncating the litigation process. In addition, the Generic Pharmaceutical Association maintains that the settlements do not prevent generic drug introduction beyond the scope of a brand-name patent.

Oral arguments are expected to occur during the spring, but the court’s decision is not expected before June 2013.