U.S., EU getting tough on "pay-for-delay"

Forces are aligning against "pay-for-delay" patent settlements. After years of pooh-poohing the Federal Trade Commission's fight against the deals, the U.S. Justice Department now has signed up for the cause. In an appellate court filing, Justice said that it's unlawful for branded drugmakers to pay generic firms to stand down from patent challenges--unless the drugmakers can justify the deal.

The filing came in response to a request from the U.S. Court of Appeals in New York, which is hearing a case involving Bayer's antibiotic treatment Cipro. Bayer paid $398 million to Barr Laboratories in 1997 to keep a generic version off the market. Though the Justice Department wouldn't speak to the specifics of this case, it said that this particular appeals court has been too lenient in allowing pay-for-delay deals to stand. It, and other courts, have tended to uphold the deals as long as they don't extend past the drug patent's expiration date.

Meanwhile, the European Union may crack down on such deals. Antitrust regulators there have been probing the patent settlements for some 18 months, and in a preliminary report accused pharma firms of costing consumers billions by not only engaging in pay-for-delay deals, but with other tactics as well. Apparently investigators now are focusing on a few drugmakers and may be preparing antitrust actions against them. The antitrust agency plans to release another report tomorrow.

- get the Justice Department news from Bloomberg
- read the Bloomberg piece on the E.U.

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