WASHINGTON - The Supreme Court ruled Monday that brand-name drugmakers can be sued for violating the antitrust laws if they make a deal that pays a potential competitor to put off selling a generic version.
The 5-3 decision is likely to benefit consumers with lower prices. The Federal Trade Commission, which has pursued suits against the drugmakers, estimated these so-called "pay for delay" deals cost consumers and health plans $3.5 billion a year.
The ruling sends a warning to drugmakers who wish to deter generic rivals from entering the market. A "large and unjustified" payment to settle a patent dispute can trigger an antitrust claim against the brand-maker, the court said.
This case posed a conflict between the patent laws, which give patent holders a type of monopoly, and the antitrust laws that forbid monopolies and anti-competitive deals.
Drug patents can last for 20 years, but sometimes the patents are questionable. For example, a drug company may obtain a new patent for 20 years by slightly changing the formula for a drug or how it is administered to a patient. In these instances, a generic competitor may sue, seeking a ruling that the extended patent is invalid.
Often, these suits end in a settlement in which the brand-name maker agrees to pay its rival to delay selling a generic for several years.
Such deals benefit the brand-maker with continued high profits, and they send money to the generic maker. Consumers, however, pay the cost through higher prices.
Monday's court rulings
WASHINGTON - In other actions Monday, the Supreme Court:
• Held 5-4 that prosecutors in some instances may use a suspect's silence at an early stage of a criminal investigation against him - before the suspect has been arrested or informed of his constitutional rights.
• Agreed to decide in its next term a new dispute involving whether suits under federal housing law require proof of intentional discrimination.
• Decided 5-4 that judges may not increase mandatory minimum prison terms when sentencing defendants unless the facts justifying the increase have been found by a jury.
• Barred lawyers, in another 5-4 ruling, from obtaining state driver license records to recruit clients, saying the practice is prohibited by a federal law aimed at shielding motor vehicle information.
• Said it would review a state court ruling upholding a $1.24 million defamation judgment against a Wisconsin airline that reported one of its pilots was potentially dangerous, despite a post-9/11 law that encourages airlines to report potential safety threats to federal officials.