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The Third Circuit Court of Appeals issued a landmark opinion on pay-for-delay deals involving pharmaceutical products, reports Businessweek.
The decision involved Merck & Co's Schering-Plough branch, which entered into pay-for-delay agreements to delay the entry of generic versions of the K-Dur drug into the market.
The Third Circuit Court of Appeals found the pay-for-delay agreement to be in violation of antitrust law, reversing a lower court judgment on the matter. This was the first time such an issue came up before the Third Circuit, although it has been addressed by other circuits.
The agreements have been around in the pharmaceutical industry for years. These arrangements allow a brand name drug maker to pay a generic competitor to stay out of the market temporarily, when the brand name drug is facing a patent challenge.
Over the years, the Federal Trade Commission has sought to block these kinds of deals, saying that these deals harmed customers and cost customers millions of dollars, reports The Washington Post.
The antitrust lawsuit was brought by over three-dozen drug wholesalers and retailers, who argued that the agreement entered into between Schering-Plough and generic drug makers of K-Dur was an illegal agreement.
The Third Circuit Court of Appeals held that the defendant bears the burden in proving that such pay-for-delay deals "promote a sufficiently pro-competitive objective."
Some critics of the decision have called it inconsistent with the decisions of other federal court rulings on the issue, reports Businessweek. Inconsistencies between the circuits could mean that the issue will be raised in the U.S. Supreme Court.
But for now, the decision may have the effect of easing the path for consumers to obtain generic drugs.
The decision has been sent back to the district court.