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US: SCOTUS splits the baby on pay-for-delay

By  |  June 17, 2013
US: SCOTUS splits the baby on pay-for-delay

The US Supreme Court has issued a sweeping ruling on so-called pay-for-delay schemes, coming to the decision that drugmakers can be sued for the agreements that are made to delay the release of generic, often cheaper drugs in stores. The 5-3 ruling overturns a previous decision from a lesser court and will be welcomed by the Federal Trade Commission, which has been combating the practice for several years on the opinion that the agreements lead to higher prices for consumers. Pharmaceutical giants largely defended the practice by claiming the pay-for-delay agreements, also known as reverse payments, were patent settlements. According to reports, the ruling could open a floodgate of litigation against some of those pharmaceutical companies by health insurers, drug retailers, wholesalers and more antitrust regulators; companies like Bayer AG are already facing lawsuits. The FTC reported that 40 such agreements were made in 2012. The Court did not back the Commission’s proposal to declare the agreements anticompetitive, however; Justice Stephen Breyer stated that each agreement should be evaluated under the “rule of reason” standard.

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    Related Content:

    Click here to read the Supreme Court’s full decision.

    Official statement from the FTC’s Chairwoman Edith Ramirez

    Antitrust guru Mark Lemley responds to pay-for-delay ruling

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