PHSI’s website Question of the Month in April 2013 asked visitors whether they believed that pharmaceutical manufacturer “Pay to Delay” settlements should be illegal. Sixty percent of respondents thought “Pay to Delay” settlements are a reasonable compromise for manufacturers. Based on the recent Supreme Court ruling, all those who responded “Yes” or “No” to the question could see their side win future cases.
On Monday, June 17th the Supreme Court released their final ruling on manufacturer pay to delay settlements. They determined that the Federal Trade Commission (FTC) can sue pharmaceutical companies for violating antitrust laws in these settlement agreements. However, the Court did not go as far to say that all “reverse settlements” are illegal. Justice Stephen Breyer wrote that the court declines “to hold that reverse payment settlement agreements are presumptively unlawful and that courts reviewing such agreements should proceed via a ‘quick look’ approach, rather than applying a ‘rule of reason’.” He went on to explain that an anti-competitive deal “depends upon its size, its scale in relation to the payor’s anticipated future litigation costs, its independence from other services for which it might represent payment, and the lack of any other convincing justification.” Access the complete Supreme Court ruling here.
There are differing opinions on the impact of the Supreme Court ruling.
- Analysts believe that the ruling will not have a large impact on the current industry standards.
- Others anticipate that legal and administrative work for manufacturers will see the greatest increases as a result of the ruling.
- Some, including the Generic Pharmaceutical Association and Chief Justice John Roberts Jr., believe that the ruling will discourage generic manufacturers from challenging brand pharmaceutical patents. This may be the case as generic manufacturer have less incentive to challenge brands if the prospects for settlements are limited.
However, the ruling may present a win for generic manufacturers who were not the first to file an ANDA, as they would have the opportunity to undo settlements between brand manufacturers and first to file generics. It is also expected that some manufacturers will enter into deals unrelated to a patent challenge in order to disguise an actual pay to delay settlement.
PHSI believes settlements will continue to be a common resolution to drug patent litigation and that lawyers will structure deals that will avoid scrutiny by the FTC.