FedSoc Blog

Justices Agree to Hear Multi-Billion Dollar Case About Generic Drugs


by Publius
Posted December 10, 2012, 10:06 AM

Politico reports:

The Supreme Court will take up “pay for delay” — the multibillion-dollar dispute over whether brand-name drug makers should be able to pay generic drug companies for agreeing to delay putting cheaper versions on the market.

The justices agreed Friday to hear the case of Federal Trade Commission v. Watson Pharmaceuticals and two other cases to resolve conflicting rulings in lower courts. Both the pharmaceutical industry and the FTC requested a Supreme Court review to resolve a long-running battle antitrust regulators have labeled “pay-for-delay” settlements.

“This is the health care reform case of 2013,” said David Balto, a former FTC policy director who helped file the first lawsuit against pay-for-delay deals back in the 1990s. “There’s no other case that can have as much impact on reducing health care costs.”

The FTC has estimated the deals cost consumers $3.5 billion annually by delaying access to cheaper generics, an estimate disputed by pharmaceutical companies. The Congressional Budget Office estimated that legislation introduced to restrict the deals would save the government more than $2.5 billion over 10 years in federal health care spending.

Both the generic and name-brand pharmaceutical industries defend the settlements. They say the deals are an efficient and, from a business perspective, predictable alternative to the uncertainty about expensive patent lawsuits fought to the bitter end.

The drug industry argues that in all cases, generics come on the market before the original patents expire and sometimes sooner than they would have even in the case of a successful patent challenge.

But FTC Chairman Jon Leibowitz has made the delay-deals a signature issue, arguing that they illegally prop up profits for drug companies at the expense of consumers. And in July, the U.S. Court of Appeals for the 3rd Circuit sided with the FTC, upsetting more than 10 years of precedent upholding the arrangements. In August, Merck & Co. asked the Supreme Court to review that case, involving the time-release potassium tablet K-Dur. . . .

Oral arguments are expected in May or June, and a ruling could come next fall.

In April 2012, FedSoc aired a post-decision SCOTUScast on a different issue regarding generic drugs. According to the summary of the broadcast:

On April 17, 2012, the Supreme Court announced its decision in Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk.  This case involves drug manufacturer “use codes,” which are patent descriptions that brand name drug manufacturers submit to the Food and Drug Administration for use in determining whether a given generic drug, if approved for marketing, will infringe a patent held by a brand name manufacturer.  The question in this case is whether a generic drug company can, in the course of a patent infringement suit brought by a brand name drug company, file a counterclaim challenging the accuracy of a particular use code.

In an opinion delivered by Justice Kagan, the Court unanimously held that a generic drug manufacturer may indeed challenge the use code in this manner.  Justice Sotomayor filed a concurring opinion.

To discuss the case, we have Gregory Dolin, who is associate professor and Co-Director of the Center for Medicine and Law at the University of Baltimore School of Law.

You can listen to the SCOTUScast here.





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