NEW YORK (Reuters) - A U.S. Appeals Court on Tuesday declined to consider a deeper legal review of patent settlements by drug companies that pay rivals to delay production of generic drugs, setting the stage for the Supreme Court or Congress to address the matter.
On April 29, a three-judge panel in New York upheld a lower court’s ruling dismissing objections to Bayer AG paying Teva Pharmaceutical Industries Inc’sBarr Laboratories to prevent it from bringing to market a version of the anthrax drug Cipro.
But the panel invited further review by the full nine-judge panel of the U.S. Court of Appeals for the 2nd Circuit, which published an order Tuesday denying the rehearing.
The Federal Trade Commission has lobbied hard to outlaw what it calls “pay for delay” deals because of the antitrust implications. The government supported the petition by labor unions and pharmacies for a rehearing by the full appeals court panel in New York.
Representatives of the FTC could not immediately be reached for a comment.
The FTC has said “pay for delay” cost American consumers $3.5 billion a year in higher prescription drug prices.
The April ruling cited a legal precedent in a 2005 ruling over the drug Tamoxifen used to treat everything from infertility to breast cancer.
In a dissenting opinion attached to Tuesday’s order, Judge Rosemary Pooler said “this court has played a significant role in encouraging this unfortunate practice.”
She wrote that our “Tamoxifen decision unambiguously deserves re-examination. The Tamoxifen majority recognized the ‘troubling dynamic’ of permitting exclusion payments that ‘inevitably protect patent monopolies that are, perhaps, undeserved.’”
Pooler said “it will be up to the Supreme Court or Congress to resolve the conflict among the courts of appeals.”
David Balto, a former FTC policy director, called the decision “a horrible day for consumers. The second circuit’s decision supports a rule of law that costs consumers billions of dollars every year in higher prices.”
The case is In re: Ciprofloxacin Hydrochloride Antitrust Litigation, U.S. District Court for the Southern District of New York, No. 05-2851 and No. 05-2852.
Reporting by Grant McCool in New York and Diane Bartz in Washington; Editing by Maureen Bavdek