The U.S. Supreme Court ruled on Monday that pay-for-delay agreements between brand and generic drug companies are subject to antitrust scrutiny—a ruling the FTC said is a “significant victory for American consumers…taxpayers and free markets.”
Pay-for-delay agreements—in which a brand-name pharmaceutical company pays a generic competitor to hold the competing product off the market for a certain period of time—were prohibited by the FTC between 1999 and 2004 but have since been upheld by several appellate courts.
A 2010 report from the FTC found that pay-for-delay agreements are estimated to cost American consumers $3.5 billion every year. The FTC said the agreements keep brand-name pharmaceutical prices high and allow generic companies to share in the profits, adding that consumers miss out on generic prices that could be as much as 90 percent less costly than brand-name prices.
Monday’s ruling relates to a deal between Brussels-based Solvay—now part of AbbVie—and Watson Pharmaceuticals—now known as Actavis—in which Watson was permitted to launch a cheaper version of Solvay’s AndroGel in 2015 for a payment estimated at between $19 million to $30 million per year, The Boston Globe reports.
The FTC labeled the deal anti-competitive and filed suit against Actavis, but an appeals court ruling led the regulator to take the case to the Supreme Court. While the court did not rule in favor of the FTC on Monday, it did send the case back to lower courts for deliberation.
“We look forward to moving ahead with the Actavis litigation and showing that the settlements violate antitrust law,”FTC Chairman Edith Ramirez said.