Bayer, Merck join fight against FTC in pay-for-delay case

Bayer and Merck ($MRK) have weighed in on the big pay-for-delay case. The two drugmakers filed briefs taking pharma's side in the case, which comes up for hearing at the Supreme Court later this month. And no wonder: It's the culmination of a years-long debate over patent settlements between generics companies and branded drugmakers.

The particular case up for the high court's consideration involves Androgel, a testosterone therapy from Solvay Pharmaceuticals, which is now part of AbbVie ($ABBV). The Federal Trade Commission sued Solvay and generics maker Watson Pharmaceuticals after the two companies settled a patent dispute over the drug. As in so many other patent settlements, Watson agreed to pay Solvay a cash settlement in return for the right to market Androgel on a particular date.

The FTC contends that such patent settlements delay generic competition, allowing branded drugmakers to keep charging premium prices--and that, in turn, costs government programs and other payers. Some $3.5 billion annually, in fact, an agency study found. The FTC has sued drugmakers repeatedly--and lobbied for legislation barring this sort of patent settlement--but so far, the practice has prevailed.

Now, though, the Supreme Court could change all that. The FTC is asking the court to rule that the so-called pay-for-delay settlements are inherently anticompetitive. Bayer and Merck join the Generic Pharmaceuticals Association in opposing the FTC's interpretation.

A ruling in The FTC's favor would have "enormous consequences," GPhA's Ralph Neas told Bloomberg. Already, payers and drug retailers have sued drugmakers over patent settlements, saying their deals forestalled generic competition. Pfizer and Ranbaxy Laboratories were sued over their Lipitor patent settlement, while Pfizer ($PFE) and Teva Pharmaceutical Industries ($TEVA) are fighting a similar suit over Effexor XR. If the Supreme Court decides such settlements did interfere with competition, then watch for a flood of similar claims.

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