Regulatory Focus™ > News Articles > FTC Seeks Supreme Court's Intervention in 'Pay-for-Delay' Cases

FTC Seeks Supreme Court's Intervention in 'Pay-for-Delay' Cases

Posted 05 October 2012 | By Alexander Gaffney, RAC 

The US Federal Trade Commission (FTC) is calling on the US Supreme Court to review a so-called "pay-for-delay" case concerning generic and branded versions of AndroGel, a topical testosterone treatment, a new escalation in the agency's long-standing efforts to curb the practice.

Pay-for-delay cases involve the manufacturer of a patented, innovative medicine paying its potential competitors not to manufacture generic versions of that medicine. FTC has consistently attacked the settlements in court, calling them "collusive" and anti-competitive. Industry, meanwhile, said the settlements can result in medicines reaching consumers years earlier than they would otherwise by avoiding costly and time-consuming patent litigation.

FTC's legal wrangling on the matter has been met with mixed results, typically skewed against its interests. In a rare win in July 2012, the Third Circuit Court of Appeals in California ruled at least one of the agreements exhibited, "prima facie evidence of an unreasonable restraint of trade," and overturned an earlier ruling by the US District Court of New Jersey.

FTC is now petitioning the Supreme Court to review the activities of Solvay Pharmaceuticals, which entered into a pay-for-delay settlement in February 2009 with three other pharmaceutical companies. An initial complaint against the settlement was thrown out of court, as was a subsequent appeal to the US Court of Appeals for the Eleventh Circuit.

In its 4 October petition for a writ of certiorari, FTC calls the issue a, "Recurring question of great economic importance."

"This case is a superior vehicle for resolving a circuit conflict on a well-defined legal issue of exceptional importance to the national economy," FTC continued. The agency called on the Supreme Court to adopt the Third Circuit Court of Appeal's approach to pay-for-delay settlement and find the practice, "Presumptively anticompetitive."

"Such agreements most closely resemble agreements through which an incumbent firm pays a potential competitor to stay out of the market-a practice ordinarily condemned as a per se violation of Section 1 of the Sherman Act," FTC explained. "Such agreements between rivals are generally anticompetitive because they directly restrict output and raise price."

The Supreme Court, which returned from its summer recess on 1 October, can agree to take up the case with an affirmative vote of four of its members.

Regulatory Focus newsletters

All the biggest regulatory news and happenings.