Earlier this week, the U.S. Supreme Court ruled that brand-name drug makers could find themselves facing a lawsuit for violating antitrust laws if they make a deal that pays potential competitors to delay selling generics on the market.
The decision came in a 5-3 vote, which will help prevent a monopoly of the market, allowing consumers cheaper alternatives at lower, more affordable prices.
The term for this somewhat sleazy practice is called “pay for delay,” and it is expected to cost consumers, as well as health plans, an estimated $3.5 billion a year. This figure was given by the Federal Trade Commission, which has already pursued lawsuits against brand-name drug-makers.
Although drug patents can last up to twenty years, there are loopholes, as the system is far from perfect. For instance, although a drug patent lasts up to twenty years, a drug company can restart the length of the patent by slightly changing its formula or method of being administered to a patient. Now that “pay for delay” has been put to rest, the generic companies can bring a lawsuit against the brand-name, claiming that the extended patent is invalid, and that the twenty year patent period should not have been reset.
Although it seems as though “pay for delay” is a disadvantageous idea for the generic companies, they agree to delay producing their products because they reach agreements with the brand name drugs. These agreements call for the delay of the generics, in return for receiving a portion of the profits. Since the brand-names are the only possible options for the consumer, they have no choice but to pay these high prices.
Justice Stephen Breyer, writing the opinion for the court, said that they took a middle-ground in terms of this ruling. He said that a “large and unjustified reverse payment” from a brand-name maker to a generic maker can trigger an antitrust suit, but the outcome is case-specific, depending on the facts presented.
This ruling will likely send a warning to drug-makers who want to deter generic rivals from entering the market, and in the long-run, will benefit all the consumers who want a variety of less-costly alternatives in regards to pharmaceutical drugs.
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