(Reuters) – The Supreme Court on Friday agreed to decide whether brand-name drug companies may pay money to generic drug rivals to keep their lower-priced products off the market, a practice estimated to cost consumers and the government billions of dollars each year.
The arrangements, known as “pay-for-delay” or “reverse payments,” have for more than a decade vexed antitrust enforcers including the Federal Trade Commission, which have been stung until recently by a series of court decisions allowing such practices.
In a typical case, a generic rival challenges the patent of a brand-name competitor, which then pays the rival a sum of money to drop its challenge. Defenders of the practice call it a legitimate means to resolve patent litigation.
The court accepted an appeal by the FTC, which had challenged annual payments of $ 31 million to $ 42 million by Solvay Pharmaceuticals Inc, now owned by Abbott Laboratories Inc, to stop generic versions of AndroGel, a treatment for the underproduction of testosterone, until 2015.
These payments went to such rivals as Watson Pharmaceuticals Inc, Paddock Laboratories Inc and Par Pharmaceutical Cos, and were intended to help Solvay preserve annual profits estimated at $ 125 million. The 11th U.S. Circuit Court of Appeals in Atlanta upheld the arrangement in April.
(Reporting by Jonathan Stempel in New York; Editing by Kevin Drawbaugh)
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