| WASHINGTON, March 25
WASHINGTON, March 25 U.S. Supreme Court justices
on Monday signaled uncertainty over how they would rule on
whether brand-name drug companies can settle patent litigation
with generic rivals by making deals to keep cheaper products off
Eight justices, lacking the recused Justice Samuel Alito,
asked questions that indicated concerns about such deals, but
several seemed unsure how courts should approach the matter.
In the deals in question, brand name manufacturers settle
litigation by paying generic manufacturers to stay out of the
market for a specified period.
U.S. and state regulators say the practice costs consumers,
insurers and government billions of dollars annually.
The Federal Trade Commission, which has called the deals
"pay for delay," has fought them in court for more than a
A number of justices on Monday appeared skeptical of the
Justice Department's argument that the deals should be viewed as
Justice Sonia Sotomayor said she had "difficulty
understanding" Justice Department lawyer Malcolm Stewart's
argument that "the mere existence" of a payment should change
the way courts view a settlement.
But several justices asked questions raising concerns that
the deals could be anticompetitive.
Justice Elena Kagan said that in some cases, companies could
share monopoly profits "to the detriment of consumers."
The problem the court appears to face is how to tell lower
courts to determine which agreements were lawful and which were
Justice Stephen Breyer suggested that the justices should
simply tell lower court judges to "keep in mind" that the deals
could be anticompetitive.
"In other words, it's up to the district court," he said.
It is unclear how many of the justices would support that
approach. Justice Antonin Scalia was openly critical, saying it
would not tackle "the elephant in the room," which is the
relative strength of the patent being challenged in the case.
Justice Anthony Kennedy voiced similar sentiments.
In the case before the court, Solvay Pharmaceuticals Inc,
which is now owned by AbbVie, sued generic drugmakers
in 2003 to stop cheaper versions of AndroGel, a gel used to
treat men with low testosterone.
Solvay paid as much as $30 million annually to Actavis Inc
predecessor Watson Pharmaceuticals, Paddock Laboratories
Inc and Par Pharmaceutical Cos to help preserve
annual profits estimated at $125 million from AndroGel.
Under the deal, the three would stay off the market until
2015. The patent expires in 2020.
The Supreme Court is expected to issue a decision by the end
The case is Federal Trade Commission v. Watson
Pharmaceuticals Inc et al, U.S. Supreme Court, No. 12-416.