Pay for delay settlements to be reviewed by US Supreme Court

Pay for delay settlements which have been surrounded by controversies over the past few years have now come up for review before the US Supreme Court by way of a writ of certiorari. The petition has been filed by Louisiana Wholesale Drug Co., Inc., CVS Pharmacy, Inc., Rite Aid Corporation and Arthur’s Drug Store, Inc., which comprises of a wholesaler and three pharmacies. The petitioners seek US Supreme Court’s review to resolve the situation by restoring the Hatch Waxman balance by prohibiting Brand manufacturers from paying competitors to forgo judicial examination of patents and thereby preserve unwarranted monopolies.

The petitioners seek a review of the petition and have cited the following reasons:

1. The Court should grant review because the Circuit Courts are divided over the standard for evaluating whether exclusion payments are anticompetitive.
2. The Court should grant review because the second Circuit’s standard Conflicts with this Court’s precedents.
3. The Court should grant review because this Case is the right vehicle to resolve this recurring issue of enormous public importance.
   

The situation began when Barr Laboratories, which is now owned by Teva Pharmaceuticals, sought to market a generic version of ciprofloxacin hydrochloride (“Cipro”); filed a paragraph IV certification asserting that the patent on Bayer Corporation’s (“Bayer”) best-selling antibiotic, Cipro, was invalid and unenforceable. Shortly before trial, Bayer and Barr settled. In exchange for Barr’s agreement to confess judgment and stay out of the market for all but six months of the remaining patent term, Bayer agreed to pay Barr quarterly payments totaling $398 million.

The legality of the pay for delay settlement was questioned and the matter brought to the US Second Circuit court of Appeals, which in April 2010 upheld the legality of the pay for delay deal between Bayer and Barr. Thereafter, in September 2010, the federal appeals court refused to reconsider its earlier ruling. However, Justice Rosemary Pooler gave a dissenting opinion and said, “It will be up to the Supreme Court or Congress to resolve the conflict among the Courts of Appeals.” Finally, the Supreme Court has been asked to review the Pay for Delay settlement.