The United States Supreme Court is set to decide whether a patent holder can pay to keep a challenger out of the market, or whether doing so violates antitrust laws.
Drug manufacturers are granted patents on their products for 20 years, giving them an exclusive right to manufacture and market the patented drug. In order to bring a generic version to market before the patent expires, a generic manufacturer will often claim that the patent is invalid. Instead of litigating the generic manufacturer’s claim, the patent holder sometimes chooses to pay the generic manufacturer a settlement or other payment to protect the patent and keep the generic drug off the market.
The Federal Trade Commission has long argued these “reverse payment” or “pay for delay” arrangements violate antitrust laws by stifling competition. The United States Courts of Appeals are split, with some courts concluding reverse payments are per se illegal restraints on trade, while others find the arrangements lawful as long as the restraint on competition does not exceed the patent term.
This month, the Supreme Court will hear arguments in one case that could resolve the split in the lower courts – FTC v. Actavis, Inc. et al. In the Actavis case, the parties settled a patent infringement suit, wherein two generic drug manufacturers agreed to delay their entry into the market in exchange for a share of profits from the sale of brand-name drug AndroGel. Oral argument is scheduled for March 25, and a decision is expected this summer. If the Supreme Court agrees with the Federal Trade Commission’s interpretation, the ruling could have a significant impact on the speed with which generic drugs enter the market.