FTC takes "pay for delay" drug case to U.S. Supreme Court

WASHINGTON Thu Oct 4, 2012 6:15pm EDT

WASHINGTON (Reuters) - The Federal Trade Commission asked the Supreme Court on Thursday to take up its fight against deals between brand-name drug companies and generic firms which they say delay the production of cheaper medicines.

The U.S. solicitor general filed an appeal on behalf of the agency asking the high court to hear the FTC's fight with Solvay, now owned by Abbott Laboratories, and three generic makers.

The companies had made a deal, sometimes called a "reverse payment," that the FTC said meant higher prices for AndroGel, a testosterone cream used by men with low testosterone.

"The anticompetitive potential of reverse-payment agreements -- which are estimated to cost consumers billions of dollars annually -- is sufficiently clear that they should be treated as presumptively unlawful," the FTC said in its court filing.

The case began in 2003, when Solvay, which makes AndroGel, filed a lawsuit accusing generic rivals Watson Pharmaceuticals Inc, Paddock Laboratories Inc and later Par Pharmaceutical Cos Inc of infringing on its patents for the drug.

The companies settled in 2006. Solvay agreed to share some of its AndroGel profits with the generic companies through 2015. In return, they agreed to keep their own versions of AndroGel off the market and to help manufacture and promote the brand-name drug.

The FTC sued both the brand-name and generic companies in 2009, arguing that the deal violated antitrust law. The agency lost in district court and also lost on appeal.

The FTC has fought such deals for more than 10 years, with mixed success. The agency has pushed for legislation to ban the patent settlements or make it easier for the FTC to challenge them.

Telephone calls to the four drug companies seeking comment were not immediately returned.

The Supreme Court case is Federal Trade Commission v. Watson Pharmaceuticals, Inc., No. 12-416.

(Reporting By Diane Bartz; Editing by Tim Dobbyn)