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Pay-for-Delay Contracts
It sounds shady: The manufacturer of a name-brand pharmaceutical product pays a potential competitor not to sell a generic version of the drug, thereby protecting its monopoly. Is this really legal? Some courts have said that it is, at least under certain conditions. But breaking ranks with several recent decisions from U.S. Circuit Courts of Appeal, the Third Circuit, in In Re K-Dur Antitrust Litigation, 2012 U.S. App. LEXIS 14527 (3d Cir. 7/16/12), has determined that, when a patent-holding drug manufacturer makes payments to potential generic competitors to keep them out of the marketplace, that fact alone serves as prima facie evidence of violation of U.S. antitrust laws.
The Set-Up
The name-brand drug company involved was Schering-Plough Corp., manufacturer of the brand-name drug K-Dur 20. Two generic manufacturers of would-be competing products sought FDA approval of their drugs by means of an Abbreviated New Drug Application (ANDA).
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