The Federal Trade Commission has the right to challenge so-called "pay-for-delay" agreements that allow brand-name drug companies to pay their generic competitors to keep products off the market, the Supreme Court ruled June 17.
The high court declared that the FTC could move forward with its antitrust lawsuit against Actavis, Solvay Pharmaceuticals, and others for participating in a legal settlement that delayed the introduction of generic products competing with AndroGel (testosterone gel) 1.62%.
Alicia Ault/IMNG Medical Media
The high court declared that the FTC could move forward with its antitrust lawsuit against Actavis, Solvay Pharmaceuticals, and others for participating in a legal settlement that delayed the introduction of generic products competing with AndroGel (testosterone gel) 1.62%.
In the case of AndroGel, three generic companies were seeking to invalidate the patent held by Solvay Pharmaceuticals, which in turn sued the generic manufacturers. The companies all settled their cases and reached similar agreements. For instance, Actavis agreed not to bring its generic product to market until August 2015, 65 months before Solvay’s patent expired. The generic drugmaker also agreed to promote AndroGel to physicians. In exchange, Solvay agreed to pay the company between $19 million and $30 million annually for 9 years. The companies said the payments were for a variety of services but the FTC disputes that, saying the real aim was to keep the generic products off the market.
In the 5-3 ruling, the justices held that these "reverse payment settlements" in which the generic company being sued for patent infringement receives the payments, can "sometimes violate the antitrust laws" and allowed the FTC to pursue its case (Federal Trade Commission v. Actavis, Inc., et al.). This overturns a lower court ruling that there was no antitrust violation because the agreement didn’t keep the generic off the market for longer than the length of the brand name drug’s original patent exclusivity period.
The court stopped short of the FTC’s request to declare that all reverse payment settlements are "presumptively unlawful." The courts will have to decide on a case-by-case basis whether the agreement violates antitrust laws, according to the ruling.
The FTC called the decision a victory for consumers that could lead to greater competition and lower drug prices.
"The court has made it clear that pay-for-delay agreements between brand and generic drug companies are subject to antitrust scrutiny, and it has rejected the attempt by branded and generic companies to effectively immunize these agreements from the antitrust laws," Edith Ramirez, the FTC chairwoman, said in a statement. "With this finding, the court has taken a big step toward addressing a problem that has cost Americans $3.5 billion a year in higher drug prices."
The agency plans to move ahead with the Actavis litigation.
Officials at Actavis praised the high court’s decision not to declare reverse payment settlements presumptively unlawful, but said the ruling will place additional and unnecessary administrative burdens on the drug industry.
"Patent settlements have saved and continue to save consumers billions of dollars, and ensure more timely introduction of generic competition," Paul Bisaro, president and CEO of Actavis, said in a statement. "We plan to continue to defend the propriety of such settlements against any further legislative or judicial challenges."