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Yesterday the Court heard arguments in Federal Trade Commission v. Watson Pharmaceuticals.  The question before the Court is whether it is legal for the patent holder of a bran-name drug to pay competition to delay introduction of a generic equivalent.  As you can read here,

Supreme Court justices suggested that they will open drugmakers to suits over “pay for delay” agreements, hinting at a ruling that would rewrite the rules governing the release of generic medicines.

During arguments Monday, the justices voiced skepticism about the accords, which the Federal Trade Commission says cost buyers as much as $3.5 billion a year. The antitrust agency says brand-name drug companies are paying generic rivals to forestall low-priced versions of popular treatments.

The Federal Trade Commission says here were 40 such agreements struck in FY2012.  the particular case being heard deals with Androgel, which is made by Solvay Pharmaceuticals, which the FTC is suing along with 3 generic makers.   Note the following:
The FTC says the price for AndroGel was poised to fall at least 75 percent in 2007 after the FDA cleared the way for competition. Faced with the prospect of losing $125 million in annual profits, Solvay instead paid the generic-makers as much as $42 million a year to delay their competing versions until 2015, the FTC says. At the time, Actavis was known as Watson Pharmaceuticals.

The companies say Solvay, now part of AbbVie, had a patent that, if backed by the courts, would have protected the drug an additional five years — until 2020.

  The FTC has lost this line of argument in 3 of four appellate circuits where it has been contested.  But only Antonin Scalia, of the 8 Justices participating (Alito recused, although without publicly giving a reason) seemed willing to accept the reasoning offered by the 11th Circuit in Atlanta, from where this case came.

This could be an important ruling in empowering the government to help keep health care costs down.

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