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Pay-for-delay to get Supreme consideration

With Justice Alito dropping out, a 4-4 tie is possible
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The U.S. Supreme Court will decide once and for all whether paying generic competitors to hold off on entering the market is legal. Or then again, maybe not.

The court on Friday said it would take up the so-called pay-for-delay deals, but Justice Samuel A. Alito Jr. recused himself from hearing this case. That leaves open the possibility for a 4-4 tie, The New York Times points out.

The Supreme Court will consider a case in which the Federal Trade Commission went after Abbott Laboratories ($ABT) for paying Watson Pharmaceuticals ($WPI) and other generic drugmakers as much as $42 million a year to keep Solvay Pharmaceuticals' AndroGel treatment for low testosterone off the market for up to 8 years. Solvay is now owned by Abbott.

The FTC claimed the deal was anticompetitive and that these deals cost consumers $3.5 billion a year, Bloomberg reports. But drugmakers claim they are just protecting their investment and the patents that are already in place. Three courts sided with the drugmakers, but a court in Philadelphia found against them, setting up the need for a decision by the Supreme Court. Both sides would like to get the issue resolved.

The FTC has been trying for years to change the practice, and cases have been brought against Bayer, Merck ($MRK), Bristol-Myers Squibb ($BMY), Watson Pharmaceuticals and Teva Pharmaceutical Industries ($TEVA), Bloomberg points out.

Action has heated up this year with CVS Caremark and Rite Aid filing a lawsuit over a deal between Pfizer's ($PFE) Wyeth unit and Teva Pharmaceutical Industries over Pfizer's blockbuster antidepressant Effexor XR. There has also been an effort afoot to approve legislation that would ban the practice. The American Medical Association recently said it supported that kind of law because it could help reduce healthcare costs. 

- read the New York Times story
- get more from Bloomberg

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