Federal regulators are pressing the Supreme Court to stop big pharmaceutical corporations from paying generic drug competitors to delay releasing their cheaper versions of brand-name drugs. The regulators argue those deals deny American consumers, usually for years, steep price declines that can top 90 percent.
The Obama administration, backed by consumer groups and the American Medical Association, says these so-called "pay for delay" deals profit the drug companies but harm consumers by adding 3.5 billion annually to their drug bills.
But the pharmaceutical companies counter that they need to preserve longer the billions of dollars in revenue from their patented products in order to recover the billions they spend developing new drugs. And both the large companies and the generic makers say the marketing of generics often is hastened by these deals.
The justices will hear the argument Monday.
Such pay-for-delay deals arise when generic companies file a challenge at the Food and Drug Administration to the patents that give brand-name drugs a 20-year monopoly. The generic drug makers aim to prove the patent is flawed or otherwise invalid, so they can launch a generic version well before the patent ends.
Brand-name drug makers then usually sue the generic companies, which sets up what could be years of expensive litigation. When the two sides aren't certain who will win, they often reach a compromise deal that allows the generic company to sell its cheaper copycat drug in a few years, but years before the drug's patent would expire. Often, that settlement comes with a sizable payment from the brand-name company to the generic drug maker.