Patent Law

Pay-for-delay drug settlements may violate antitrust laws, SCOTUS says in AndroGel case

The U.S. Supreme Court has ruled that so-called pay-for-delay settlements that temporarily keep generic drugs off the market may violate antitrust laws.

In a 5-3 decision (PDF), the court revived an antitrust suit by the Federal Trade Commission in a case involving the testosterone treatment AndroGel. Justice Stephen G. Breyer wrote the majority opinion holding that the FTC should be given a chance to prove its antitrust claim.

The company that patented AndroGel, Solvay, had filed an infringement suit against companies planning a generic version of the treatment. The case settled when Solvay agreed to pay the generic makers millions of dollars, and the generic companies agreed they would not market their version of the drug until 2015, five years before Solvay’s patent expired. The FTC had contended the real purpose of the payments was to compensate the generics for agreeing to delay their competing medication.

The Atlanta-based 11th U.S. Circuit Court of Appeals had dismissed the FTC’s suit, saying patent holders have a right to exclude others from the market. Breyer disageeed, saying a “large and unjustified” reverse payment by the patent holder may have anti-competitive effects.

“We recognize the value of settlements and the patent litigation problem.” Breyer said. “But we nonetheless conclude that this patent-related factor should not determine the result here.”

Breyer disagreed with the FTC’s suggestion, however, that pay-for-delay settlements are presumptively unlawful.

Chief Justice John G. Roberts dissented in an opinion joined by Justices Antonin Scalia and Clarence Thomas. Justice Samuel A. Alito Jr. did not take part in the decision.

The case is FTC v. Actavis.

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