Call Today for a FREE Confidential Case Review
Toll-Free 24/7 (866) 920-0753

Circuit Court Strikes Down Generic Drug Pay-for-Delay

July 24, 2012 — A federal appeals court in Philadelphia has ruled that it is illegal for brand-name drug companies to pay generic drugs companies not to produce generic drugs after the patent expires on brand-name drugs. The Federal Trade Commission (FTC) has aggressively opposed the practice, saying that it violates basic antitrust principles and costs the U.S. taxpayer billions every year.

The case involves K-Dur 20, a potassium supplement manufactured by Schering-Plough. The product is used to counteract side effects of other drugs used for hypertension and congestive heart failure. The company owns a patent on the unique time-release coating for the drug. As this patent neared its expiration date, Schering-Plough paid one generic competitor $60 million, and another competitor $15 million.

The tactic, known informally as “pay-for-delay”, is a legal tactic used by brand-name drug companies to stop generic drug companies from bringing competitor drugs to market. The companies are paid not to bring lower-cost generic drugs onto market.

The victims of this practice are sick customers, insurance companies, and the U.S. taxpayer, who are forced to pay the monopoly brand-name drug prices, which are significantly higher than generic drug prices. According to an FTC study, the anticompetitive deals cost consumers and taxpayers $3.5 billion in higher drug costs every year.

The Federal Trade Commission has made it a top priority to stop the practice, but pharmaceutical companies appealed the FTC regulations. In 2005, two appeals courts found that the companies could legally settle patent disputes with do-not-compete settlements.

The Third Circuit appeals court in Philadelphia has overruled these decisions, saying that “pay-for-delay” amounts to an illegal restriction of trade, unless the drug companies can prove that the payments were made for a purpose other than delaying the entry of generic drugs onto the market.

In a statement from FTC Chairman Jon Leibowitz,

“The Third Circuit Court of Appeals seems to have gotten it just right: These sweetheart deals are presumptively anticompetitive. As our Bureau of Economics has estimated, they cost American consumers $3.5 billion a year in higher health care costs. Restricting these arrangements, as many in Congress have proposed, would reduce federal government debt by $5 billion over 10 years, according the Congressional Budget Office. It’s time for the pharmaceutical companies to return to the side of consumers.”

Do I have a Dangerous Drug Lawsuit?

The Schmidt Firm, PLLC is currently accepting pharmaceutical drug induced injury cases in all 50 states. If you or somebody you know has been injured by a defective drug, you should contact our lawyers immediately for a free case consultation. Please use the form below to contact our Dangerous Drug Litigation Group or call toll free 24 hours a day at (866) 920-0753.

Attention Lawyers: We consider a referral from another law firm to be one of the greatest compliments. If your firm is interested in referring us a case or for us to send you a list of previous award judgments and/or average referral fees, please visit the Lawyer Referral section of our website.

Free Case Evaluation

The Schmidt Firm, PLLC has been recognized as one of the nation’s leading plaintiffs' law firms and handles cases in all 50 states. We are very proud of our legal achievements, but equally self-respecting of our firm's reputation for providing personal attention to each and every client we represent.

No matter what type of case you have, you may contact us with confidence by filling out the email contact form below or calling us directly by dialing toll free 24 hrs/day (866) 920-0753.