After obtaining patents to cover a new prescription medication, several large pharmaceutical companies have recently pursued so-called pay-for-delay, or reverse payment, strategies that effectively compensate generic drugmakers for their promise not to challenge the patents held by the larger firm or introduce competitive offerings to the marketplace for a set period of time. The U.S. Federal Trade Commission has decried these potentially anti-competitive practices for several years, but this week the agency received its strongest show of support yet from the highest court in the land.

In a 5 to 3 decision, the U.S. Supreme Court ruled that the FTC should have been authorized to conduct antitrust investigations surrounding the distribution of the hormonal prescription AndroGel. Court proceedings confirmed that AndroGel manufacturer Solvay Pharmaceuticals had agreed to pay between $19 million and $30 million to generic competitor Actavis annually for nine years to postpone the smaller firm's market entrance.

"The Court has made it clear that pay-for-delay agreements between brand and generic drug companies are subject to antitrust scrutiny, and it has rejected the attempt by branded and generic companies to effectively immunize these agreements from the antitrust laws," FTC Chairwoman Edith Ramirez commented on the case. "With this finding, the Court has taken a big step toward addressing a problem that has cost Americans $3.5 billion a year in higher drug prices."

According to Modern Healthcare, the American Association of Retired Persons and other consumer advocacy groups are optimistic that the FTC will be emboldened by this decision and ultimately root out the majority of these anti-competitive pharmaceutical patent strategies in the years to come.