Supreme Court slaps pharma aside in pay-for-delay ruling

The U.S. Supreme Court has ruled in the big pay-for-delay case. In a 5-3 vote, the court ruled that the Federal Trade Commission has the right to challenge brand-name drugmakers' patent settlements with generics companies. It's a slap in the face for the drug industry, which has united behind the settlements, saying they speed generics to market rather than impeding competition.

The opinion, written by Justice Stephen Breyer, stops short of adopting the FTC's position that these patent settlements should be assumed anticompetitive unless proven otherwise. But it reverses the circuit court's ruling that shielded the companies from most lawsuits challenging their patent deals. So, the decision could open the way for more lawsuits from payers, retailers, wholesalers and the like--not to mention the FTC.

The FTC has been challenging pharma patent settlements for years, and more recently, European antitrust watchdogs have jumped into the fray. Early this month, E.U. regulators were preparing to move against 9 drugmakers involved in questionable patent settlements, including Lundbeck, Ranbaxy Laboratories and Merck KGaA.

No doubt the FTC will step up its fight; the agency reported earlier this year that the pace of pay-for-delay dealmaking has increased. In fiscal 2012, drugmakers wrapped up 40 patent settlements, the FTC said, up from 28 the year before. And then there's the threat from private-sector lawsuits. Drugstore chains such as CVS Caremark, Rite Aid and Walgreen have sued Big Pharma and generics makers, accusing them of conniving to keep cheaper copies off the market. Pfizer ($PFE) alone has been challenged at least three times for settling patent fights over Lipitor and Effexor.

- see the Reuters news