FILE – In this Aug. 12, 2011 file photo, Jeremy Lazarus, president-elect of the American Medical Association (AMA) speaks in Portland, Oregon. The Supreme Court will struggle this week with whether it’s legal for patent-holding pharmaceutical companies to pay rivals, who make generic drugs, to temporarily keep those cheaper versions of their brand-name drugs off the market. Now AMA President, Lazarus said in a statement,”The AMA believes that pay-for-delay agreements undermine the balance between spurring innovation through the patent system and fostering competition through the development of generic drugs. Pay for delay must stop to ensure the most cost-effective treatment options are available to patients.” (AP Photo/Rick Bowmer, File)
WASHINGTON (AP) — 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. They argue these 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 drugmakers aim to prove the patent is flawed or otherwise invalid, so they can launch a generic version well before the patent ends.
Brand-name drugmakers 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 Login to read more