The U.S. District Court in Newark, New Jersey, dismissed a class action suit brought against drug manufacturer, Schering Plough, alleging that payments it made to two generic drug manufacturers in order to delay the introduction of generic forms of one of its products, violated antitrust law.
In 1995, Schering-Plough filed a patent infringement suit against Upscher-Smith Laboratories, and in 1996, against ESI/Lederle Laboratories, claiming that these two generic manufacturers’ plans to introduce generic forms of its medicine for the treatment of potassium deficiency, “K-Dur”, violated its patents.
This decision is interesting in light of the European Union’s recent inquiry of 8th July, 2009 into the possibly anticompetitive practices of the pharmaceutical industry, especially as relating to abuse of patent-related lawsuits in order to delay the introduction of generic forms of patented products.
Indeed, this case is interesting because the District Court did not examine the merits of the plaintiffs’ claims concerning the anticompetitive nature of the payments made to generic drug manufacturers by Schering-Plough.
Whether Schering-Plough intended to market the licensed products, or whether it simply intended to pay the generic manufacturers in order to delay the introduction of generic forms of K-Dur, the case may be revealing of a different approach to this issue in the United States than in Europe.
In Europe, drug consumers are generally price-insensitive, the cost of treatment being covered by mandatory national health plans, whereas in the United States, the cost of medicine is either paid for by private insurers, or in the case of uninsured patients, by the patients themselves.
This decision may indicate that the rapid introduction of generic drugs is not as politically important in the United States as in the European Union, for in the former, the reduction of healthcare costs is not as pressing a concern for public finances as in the latter.
However, it is interesting to note that in the bill of the celebrated Medical Insurance Law, recently passed by the United States Congress, a provision to ban “pay for delay” payments by pharmaceutical companies to generic drug manufacturers was dropped in the final text of the law. This may indicate that in the coming years, the United States will adopt stricter regulation on these types of deals in order to stimulate competition in the pharmaceutical market in order to lower the cost of treatment.