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25-03-2013 | Article

Supreme Court ‘pay for delay’ showdown begins

Abstract

Trial brief

medwireNews: The UK's second-largest drugmaker, AstraZeneca, agreed to settle a patent infringement lawsuit with Actavis, which is a generic drug manufacturer that was accused of violating a patent on rosuvastatin calcium - the former's best selling cholesterol treatment.

Strangely, the agreement was reached on the same day that the Supreme Court will hear the case, Federal Trade Commission v. Actavis, which will decide whether anti-trust laws are violated when brand-name drug companies pay generic companies to keep cheaper versions of drugs off the shelves.

In the case of the Supreme Court hearing, which concerns a different drug, generic and brand-name drug companies will both argue against the federal government that such payments are actually not breaking anti-trust laws because it ultimately leads to a more expedient release of generics into the market than what patents would technically allow.

Paul Bisaro, chief executive of Actavis, has argued that there is a misperception that drug companies are paying his company to keep the generic drug off the market.

The matter revolves around Solvay Pharmaceutical's testosterone replacement therapy, AndroGel, and Actavis's intention to sell a generic version approved by the Food and Drug Administration (FDA).

Because AndroGel received a patent from the FDA in 2003 that expires in 2020, Solvay filed an infringement lawsuit against Actavis that same year. The quarrel was settled when Actavis was allowed to start selling its generic in 2006 - thanks to the Drug Price Competition and Patent Term Restoration Act.

But the arrangement entails Actavis providing marketing support to Solvay as long as the former receives $ 20 million to $ 30 million per year to hold off from releasing their generic version until 2015 - 5 years before patent expiration.

The question that will be deeply considered at the Supreme Court this week is whether Solvay was essentially purchasing staying power in the market - otherwise known as a "pay for delay" agreement or reverse payment.

In this situation, brand-name drug companies like Solvay have successfully argued in previous federal appeals courts that the arrangement makes generics available to the public a lot sooner while the brand-name company gains no added benefit than if they exercised their patent ownership to the fullest extent.

The Supreme Court will making a final ruling later this year, which could prove pivotal to an industry that sold approximately $ 320 billion of pharmaceuticals in 2011.

By Peter Sergo, medwireNews Reporter