Supremes won't revisit Bayer pay-for-delay case; FTC vows to press on

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The Supreme Court decided not to revisit a suit in which Bayer was accused of paying to delay competition on antibiotic Cipro, backing the legality of pay-for-delay patent litigation settlements.

The court dismissed a legal challenge from several drugstore chains that sought to overturn a 1997 settlement between Bayer and Barr Laboratories Inc., which is now part of Teva Pharmaceuticals. The deal called for a $400-million payment from Bayer, after which Barr dropped its patent challenge on Cipro and agreed to shelve the launch of its copycat version of ciprofloxacin until June 2003.

These kinds of settlements end costly patent litigation, a boon for branded and generic drug companies, and stall the entry of cheaper non-branded competition for a specified period of time after the patent expiry. The Federal Trade Commission has challenged the deals as anti-competitive, but courts have mostly found the private accords lawful.

“I am confident that it's only a matter of time before the Supreme Court takes up this important issue and puts a stop to these anticompetitive deals between branded drug makers and generic competitors, which are costing American consumers and taxpayers billions of dollars a year in higher prescription drug prices,” Richard Feinstein, director of the FTC Bureau of Competition, said today in an emailed statement.

However, it will be harder to convince judges that pay-for-delay settlements are illegal, said Glenn Lammi, chief counsel for the non-partisan Washington Legal Foundation. Pharmaceutical companies in ongoing cases, including one against Watson and Cephalon, can now make the point that there have been three significant circuit court decisions on the issue, one of which went to the Supreme Court.
“It's certainly persuasive to other circuit court judges,” Lammi said of the high court's refusal to reopen the Cipro case, which had already been denied a rehearing by the Court of Appeals for the Second Circuit.

In a post on the WLF's Legal Pulse blog yesterday, Lammi declared the debate over the settlements' legality "mostly over." He said the FTC is likely to continue its campaign in Congress, trying to push for the kind of authority that the Kohl bill in the Senate provides to restrict the deals. Other lawmakers have advanced bills targeting the settlements, and the president's budget includes providing FTC with the authority to prohibit the agreements.
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