Supreme Court to Take on “Pay-for-Delay” Pharma Case

The Supreme Court has agreed to consider a case that determines if brand-name drug companies can “pay-for-delay,” or pay generic drug to keep lower-priced products off the market. This practice, Reuters said, is estimated to cost consumers and the government billions of dollars each year.

The court accepted an appeal by the Federal Trade Commision, which brought attention to annual payments of $31 million to $42 million by Solvay Pharmaceuticals Inc. to stop production of generic treatments for its drug that helped the underproduction of testosterone until 2015. Payments went to the company’s rivals and were expected to help Solvay keep its annual profits from being cut as much as $125 million.

Under the Hatch-Waxman Act, the first company to win Food and Drug Administration approval before the  patent expires has a 180-day exclusive right to market that product, but deals like this have been allowed by courts one way or another for about a decade. Usually makers of the generic drug challenge the patent of the brand-name competitor, which then pays the generic-drug maker to drop its challenge.

The Congressional Budget Office estimates that enacting a bill to make generics more available would save state and local government about $85 million in Medicaid spending over the 2012-2016 period.

A decision is expected by the end of June.