The Price Tag of ‘Pay-for-Delay’

By Robin Feldman (UC Hastings Law)

In a landmark decision nearly a decade ago, the Supreme Court opened the door for antitrust suits against brand and generic pharmaceutical companies who engage in collusive settlements to delay the time for the generic to come to market. With these “pay-for-delay” agreements, brand-name companies offer prospective generic competitors cash in exchange for the generic’s promise not to enter the market until an agreed-upon date. Laying the groundwork for the lawsuit that would eventually lead to the Actavis decision, the Federal Trade Commission (FTC) published a study estimating that pay-for-delay agreements cost American consumers $3.5 billion annually, a figure that has been cited repeatedly by scholars and policy-makers alike.

As this article will demonstrate, the $3.5 billion figure vastly understates the landscape. Moreover, although the Supreme Court’s landmark decision in Actavis opened the door for antitrust litigation, courts have failed to follow through on the pathway provided. To understand the state of pay-for-delay agreements, this article presents an in-depth examination of the burden that pay-for-delay imposes, both on society at large and on individual patients, as well as exploring the modern legal landscape that has emerged since the Supreme Court’s historic pronouncement.

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