Reports: SCOTUS to take up branded-generic patent settlements

"Pay-for-delay" deals to have their day before high court

NEW YORK — The Supreme Court will review settlements between branded and generic drug companies that critics say delay patients' access to cheaper drug treatments, according to published reports.

Politico reported that the justices had agreed to hear three cases, including Federal Trade Commission v. Watson Pharmaceuticals, involving settlements between branded and generic drug companies that critics deride as "pay-for-delay" deals.

Typically, when a generic drug company wants to be the first to market a generic version of a drug, it will file for Food and Drug Administration approval for it before the branded drug has lost patent protection. This usually prompts a lawsuit from the branded drug company, and while the suits often go to trial, in many cases, they will result in a settlement that allows the generic drug maker to launch at a later date.

While the "pay" part of the deal may be monetary, it frequently consists of a promise on the part of the branded drug maker not to market an authorized generic — essentially the branded drug marketed at a discount under its generic name, usually by a third-party company — during the 180-day market exclusivity period to which generic companies are entitled if they are the first to win approval for a generic, when they have the sole right to compete against the branded version.

The FTC estimates that the deals raise the cost of drugs by $3.5 billion per year, while drug companies say that the deals get drugs into the hands of consumers faster than they would if the patent-infringement suits went to court, and that delaying the launch of a generic drug beyond patent expiration would be illegal anyway.

Industry trade groups like the Generic Pharmaceutical Association and the Pharmaceutical Research and Manufacturers of America have defended the deals, while others, such as the American Medical Association, have come out in favor of legislation to make them illegal, as the AMA did in a statement last month.

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