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David Mittleman
David Mittleman
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Supreme Court to Hear Case Against Big Pharma Deals That Slow Market Entry of Generic Drugs

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The Supreme Court is slated to hear the government's case charging collusion between brand-name and generic drug makers to keep prescription drugs artificially high priced. The Federal Trade Commission has spent ten years attempting to put together a case against big pharma for paying about $250 billion per year to generic pharmaceutical manufacturers to keep them from making cheaper versions of drugs.

The FTC says that the number of settlements that brand-name pharmaceutical companies have paid to generic companies has risen astronomicallly within just a few years–from merely two settlements in 2005 to 40 last year. Big pharma argues that such settlements are necessary, since without such settlements milions of dollars would be wasted in litigation costs when generic companies attempt to challenge drug patents. As such, they argue that the lower-cost drugs would be left out of the market even longer until the name-brand patent expires.

However, the Justice Department contends that when big pharma pays such settlements, they cost consumers hundreds of millions of dollars each year when they must spend the money on more expensive brand-name drugs. The FTC counters that generic drug companies do not actually lose as many patent challenge cases as big pharma would have us believe and that the problem of "pay-for-delay" is getting worse and contributing to an anti-competitive nature of pharmaceutical drugs. The FTC's position is supported by dozens of groups, including doctors, insurers, retail and wholesale drug stores, and the AARP.