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Supreme Court rules 'pay-for-delay' drug deals can be illegal

The Hill, June 18, 2013

A divided U.S. Supreme Court ruled Monday that some "pay-for-delay" settlements between drug companies and their competitors violate antitrust laws. The 5-3 decision, a limited victory for the Obama administration, paves the way for federal regulators to challenge such deals in court. Pay-for-delay settlements typically occur when a company develops and patents a new drug to be released into the marketplace. Competitors that wish to introduce a generic version often challenge the patent. Rather than fight the challenge, patent-holding drugmakers have found it more lucrative to simply pay the competitor to keep generics off the market. The two firms then share monopoly profits that are, in some cases, much higher than open competition would yield, critics charge.