Supreme Court to hear 'pay-for-delay' case

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Pay-for-delay settlements occur when the first generic version of a brand-name drug is about to come to market. The brand-name drug's manufacturer sues for patent infringement, and the two parties reach a settlement in which the brand pays the generic to stay off the market.

The agreement gives the brand-name firm more time to market its product at full price, without generic competition, while the generic gets paid anyway without selling its product.

The FTC strongly opposes the settlements, saying they deprive consumers of the discounts generics are supposed to provide. Both the brand-name and generic drug industries, though, have defended the settlements and opposed any new restrictions.