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Supreme Court Hears Arguments on Generic Drug Deals

The AP reports Supreme Court justices “appeared troubled Monday over whether to stop deals between pharmaceutical corporations and their generic drug competitors that the government says could keep cheaper forms of medicine from American consumers for longer periods of time.” The Justices heard arguments from the DOJ “against what the government calls ‘pay-for-delay’ deals or ‘reverse settlements.’” The Administration, “backed by consumer groups and the American Medical Association, wants the court to stop the deals because it says they profit the drug companies but harm consumers by adding $3.5 billion annually to their drug bills.”

The Wall Street Journal says that justices expressed concerns about the deals, but also conceded that the drug industry may have legitimate arguments for them.

Bloomberg News reports, “the justices voiced skepticism about the accords, which the Federal Trade Commission says cost buyers as much as $3.5 billion a year. The antitrust agency says brand-name drug companies are paying generic rivals to forestall low-priced versions of popular treatments. The accords benefit the companies ‘to the detriment of consumers,’ Justice Elena Kagan said.” Bloomberg adds, “Several justices suggested they weren’t comfortable with the FTC’s proposed test to determine whether the accords are anticompetitive. The antitrust agency says courts should start with the presumption that a payment from a brand-name drugmaker to a generic rival is illegal.”

USA Today reports, “Consumers will have billions of dollars on the line today when the Supreme Court hears the government’s case charging antitrust collusion between brand-name and generic drugmakers. What’s in dispute, though, is whether the questionable deals cheat consumers – or whether they come out ahead.” The Federal Trade Commission “has been on a decade-long crusade to stop settlements in which brand-name drugmakers pay generics to stay out of the $250 billion U.S. drug market for a specified number of years,” but drug manufacturers “say that without such settlements, millions of dollars would be wasted in litigation, and when generics lose patent challenges, the lower-cost drugs would remain off the market even longer, until the patent expires.”

The New York Times reports, “The case, Federal Trade Commission v. Actavis, No. 12-416, centers on whether the maker of a brand-name drug can pay a generic-drug company to keep the generic version off the market. Based on antitrust law, the obvious answer would seem to be no, the view voiced by the government and most recently upheld by a federal appeals court. At least three other federal appeals courts have previously said those payments are legal, however, when made under the settlement of a patent infringement lawsuit. Those courts sided with drug company arguments that the payments are what Congress intended in setting up guidelines to encourage the production of generic drugs. The question before the justices pits a company’s constitutional right to protect its intellectual property – through reliance on a patent that excludes competitors – against antitrust law, which holds that a company cannot unfairly exclude others from legitimately entering a business with a rival product.”

The AP reports, “The Obama administration, backed by consumer groups and the American Medical Association, says these so-called ‘pay for delay’ deals profit the drug companies but harm consumers by adding 3.5 billion annually to their drug bills. But the pharmaceutical companies counter that they need to preserve longer the billions of dollars in revenue from their patented products in order to recover the billions they spend developing new drugs. And both the large companies and the generic makers say the marketing of generics often is hastened by these deals.”

The Philadelphia Inquirer reports, “In industry shorthand, the agreements are known as reverse payments, exclusion payments, or pay-to-delay deals. The FTC says such deals, when they involve payments, violate the Sherman Antitrust Act and cost taxpayers $3.5 billion per year. The commission wants the Supreme Court to overrule the U.S. Court of Appeals for the Eleventh Circuit in Atlanta, the last of three appeals courts to sanction the practice.”

From the American Association for Justice news release.

Bob Kraft

I am a Dallas, Texas lawyer who has had the privilege of helping thousands of clients since 1971 in the areas of Personal Injury law and Social Security Disability.

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The title of this blog reflects my attitude toward those government agencies and insurance companies that routinely mistreat injured or disabled people. As a Dallas, Texas lawyer, I've spent more than 45 years trying to help those poor folk, and I have been frustrated daily by the actions of the people on the other side of their claims. (Sorry if I offended you...)

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