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Marcia M. Boumil, J.D., LL.M., and Gregory D. Curfman, M.D.N Engl J Med 2013; 369:696-697August 22, 2013DOI: 10.1056/NEJMp1308368
In June, the U.S. Supreme Court issued two rulings regarding the marketing of generic drugs that may alter the pharmaceutical business landscape. First, in Federal Trade Commission v. Actavis, the Court confronted the law governing a controversial pharmaceutical marketing practice known as reverse payment agreements, or pay for delay.1 This practice occurs when a generic drug company identifies a vulnerable patent held by a brand-name drug manufacturer and seeks approval from the Food and Drug Administration (FDA) for a generic version before the patent expires, provoking a lawsuit for infringement. The two companies then forge a settlement whereby the brand-name company pays the generics firm to delay commercialization of its product. Extending the monopolies of brand-name companies in this way reportedly costs consumers more than $3.5 billion per year.2 Since such settlements suppress competition, the Court sent the case back to the district court to be evaluated according to the “rule of reason,” one of the standards for determining whether an action violates antitrust law.
Second, in Mutual Pharmaceutical v. Bartlett, the Court ruled that generics manufacturers are substantially immune from civil claims regarding injuries caused by their products — a decision that eliminates a primary incentive for...