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tazzygirl -> "Pay for delay" trial sent back to 11th Circuit Court (6/19/2013 8:33:29 PM)
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The Supreme Court has rejected the pharmaceutical industry’s front-line defense of “pay-for-delay” patent settlements and ordered a lower court to hear the Federal Trade Commission’s case against them.
In a decision that will reshape billions of dollars’ worth of drug patent litigation nationwide, the court ruled 5-3 Monday that the 11th Circuit Court of Appeals was wrong to dismiss the FTC’s complaint that a brand-name drugmaker violated antitrust law in paying generic firms to delay introducing competitors to the market.
The decision effectively kicks the case back to the lower court to work out details, but under a new framework. The biggest change is that the court has rejected the pharmaceutical industry’s key defense of the settlements. Under the so-called scope of the patent test, drugmakers have argued that as long as the settlements bring generic drugs to market before the brand drug’s patent expires, any related financial arrangement between the two companies is acceptable.
The case, FTC v. Actavis, arose from the testosterone gel AndroGel, made by Solvay Pharmaceuticals. As part of a patent settlement, Solvay paid generic drugmakers tens of millions of dollars to wait to sell competing products until 2015.
Justice Stephen Breyer, who wrote the majority opinion, cited several reasons the deals could still be anticompetitive. The payments “for staying out of the market keeps prices at patentee-set levels and divides the benefit between the patentee and the challenger, while the consumer loses,” he wrote.
Swing Justice Anthony Kennedy joined the four liberals in the majority. Justice Samuel Alito recused himself and the three other conservative justices dissented.
The FTC welcomed Monday’s ruling. It estimates that the arrangements cost consumers $3.5 billion a year in higher drug costs and has crusaded against the settlements for more than a decade.
The decision is a disappointment for both brand and generic drug companies, rivals that are nonetheless united in defense of the practice. The drug industry contends that the settlements are a routine part of doing business to avoid unpredictable and costly litigation. They say it lowers the cost of drugs for consumers in the long run.
“It’s a disappointing result,” said Diane Bieri, a partner at Arnold & Porter and former general counsel at PhRMA. “The court did not show much consideration for the strength of patents.”
The decision provides little guidance to the lower courts for how to evaluate the arrangements, a process that is likely to unfold over years.
The court did not support the FTC’s argument that such settlements should be presumed anticompetitive unless the parties could prove otherwise. Instead, it instructed the lower courts to apply a standard measure of antitrust law called “the rule of reason,” which weighs whether the benefits of the settlement outweigh the harm to consumers.
“Rather than lay out a specific procedure, the court sends it back to the lower court to lay out the details,” said Scott Hemphill, a professor at Columbia Law School who has studied the settlements. “The main message here … is the idea that the normal rules of competition apply to the drug industry as well.”
http://www.politico.com/story/2013/06/scotus-gives-pay-for-delay-case-another-day-in-court-92897_Page2.html#ixzz2WivyBJt6
Could this actually be a benefit to consumers, or just more years of litigation, the cost of which to be passed on to the consumer?
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