Merck Takes 'Pay for Delay' Appeal to SCOTUS - U.S. Third Circuit
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Merck Takes 'Pay for Delay' Appeal to SCOTUS

Merck wants the Supreme Court to resolve the circuit split regarding pay-for-delay arrangements, reports Thomson Reuters News & Insight.

In July, the Third Circuit Court of Appeals ruled that pay-for-delay arrangements are presumptively anti-competitive. It was the first appellate court to reach that conclusion.

This week, the pharmaceutical giant filed a petition for certiorari, asking the Court to reverse the decision.

Why are pay-for-delay deals so controversial?

Only one in 5,000 new drugs will make it market, and the process usually takes 15 years and more than $1 billion. The drugs that make it through the regulatory process receive patent protection, an exclusivity period, and (usually) mega-profits.

But at the end of the exclusivity period, the brand name manufacturer's profit share falls off a cliff as generic manufacturers enter the market. (Many insurance companies require patients to take a generic version of a drug if it's available, or provide a doctor's letter that a generic is an unacceptable alternative to the brand name drug.)

One way that Big Pharma manufacturers avoid the generic market profit dropoff is through pay-for-delay arrangements. Pay-for-delay is an agreement between a brand-name pharmaceutical maker and a generic drug company that delays the introduction of cheaper drugs onto the market. The FTC characterizes these agreements as unfair restraints on trade that violate federal antitrust laws.

So far, the appellate courts are 3-to-1 in favor of pay-for-delay arrangements. The Third Circuit Court of Appeals held that courts should employ a presumption that the arrangements are anti-competitive. The Second, Eleventh, and Federal Circuits have all upheld the agreements under a scope-of-the-patent test.

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