Supreme Court to Rule on Pay-to-Delay Arrangements

On March 25, 2013, the United States Supreme Court heard arguments on “pay-to-delay” arrangements, in which the manufacturer of a branded medication pays another company to keep a generic version off the market. The court’s decision in Federal Trade Commission v Actavis Inc, which is expected in June, could have far- reaching consequences for how much patients pay for medications.

The FTC argues that these payments violate antitrust law because they allow the branded manufacturer to maintain an effective monopoly on the sale of a given medication, forcing consumers to pay more than they would if a generic version were available. Drug manufacturers counter that the agreements save consumers money because they tend to make a generic version of the medication available before its patent is set to expire.

Federal district courts have issued conflicting rulings on these arrangements. In the oral argument, the justices seemed skeptical that the arrangements are legal but also seemed disinclined to declare that they are categorically illegal. Among possible alternative remedies discussed by the justices were allowing district court judges to decide whether the payments pass muster on a case-by-case basis, or capping the allowable size of the payments so that generic companies would not stand to make more from “pay-to-delay” agreements than they would from marketing generic versions of the drugs in question.