Supreme Court declines to hear 'pay-to-delay' pharma case

The federal government's decade-long quest to limit pharmaceutical manufacturers' actions to keep generic medications off the market for a specified time--through deals called "pay-to-delay"--ran into a new challenge Monday: The U.S. Supreme Court, without comment, declined to hear a federal appeals court decision from a year ago that had upheld the practice.

In that earlier ruling, the New York-based appeals court dismissed a legal challenge regarding Bayer AG to pay a potential generic competitor, Teva Pharmaceutical's Barr Pharmaceuticals, in a 1997 deal to delay introduction of a generic version of Cipro, a popular antibiotic.

However, in an unusual move, the appellate court encouraged the plaintiffs in this case--including pharmacy chains CVS and Rite Aid--to petition for a rehearing en banc, in which all of the appellate judges would hear the case. However, that petition was denied last fall, which lead to attempts for a review from the Supreme Court.

The Federal Trade Commission (FTC) has strongly opposed such "pay-to-delay" deals, which it has estimated to cost consumers as much as $3.5 billion a year in higher prescription drug prices.

The Obama administration also is against these settlements. In the President's recent budget request, according to a report from The Pharma Letter, he has proposed giving the FTC powers to block these types of agreement between brand-name drug companies and generic drug companies.

Restrictions on "pay-to-delay" were included last year in the initial House healthcare reform bill, but they were excluded in the final healthcare reform law passed last March.

For more details:
- see The Pharma Letter article
- read the Reuters article