U.S. Supreme Court Hearings on Drug Company Settlements

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Reuters reported the U.S. Supreme Court is beginning hearings on arguments during the last week of March 2013 in a case challenging payments provided by brand-name drug manufacturers to generic companies to settle patent lawsuits.

The case involves Solvay Pharmaceutical Inc. and three generic drug manufacturers over Solvay’s AndroGel, a testosterone drug. Solvay Pharmaceuticals, Inc. markets more than 32 drugs in the U.S. The company has one drug in the top 100 drugs by U.S. sales, according to Drugs.com in 2012. Medications for drug companies may be distributed under different names in foreign countries.

  

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The U.S. Supreme Court agreed in late 2012 to review the legality of patent settlements in which pharmaceutical companies that distribute branded drugs give funds to generic-drug manufacturers to postpone the sale of generic versions.

The Federal Trade Commission (FTC) for several years fought patent deals that delay the market of generic drugs. According to the Wall Street Journal, the FTC states the settlements do not allow the public to save billions in less expensive drugs. While the high court’s ruling on the case is projected to increase litigation in the pharmaceutical industry, its impact on patent settlements in other industries is debatable.

At issue is U.S. Supreme Court case is a settlement where Solvay, which is now part of Abbott Laboratories, filed suit against the generic drug manufacturers claiming their plans to market a version of AndroGel infringed Solvay’s patents.

Solvay settled the patent case by agreeing to give the generic drug makers money to keep their versions off the table until 2015. This was five years prior to the expiration of the AndroGel patent. The FTC challenges the Solvay settlement. According to Reuters, the FTC contends the “pay for delay” transactions or “reverse payments” go against antitrust law and harm consumers by postponing lower priced alternatives to recognized brands.

The 11th U.S. Circuit Court of Appeals went with the drug manufacturers that had patents, and ruled, with a few exceptions, reverse payments relating to patent fights, are immune from the competition laws.

If the U.S. Supreme Court does not side with the 11^th U.S. Circuit Court of Appeals, and decides pay for delay payments need to comply with antitrust laws, patent settlements may be scrutinized not just in the drug industry, but also other industries.

According to Reuters, Jeffrey Cross, an antitrust attorney at freeborn & Peters said:  “I don’t see a basis to limit the analysis to brand-name and generic drug settlements.”