7 Indest-2008-4By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

The Supreme Court is currently looking into whether brand name drug manufacturers may pay generic drug manufacturers to keep the generic drugs off the market. These payments, often called pay-for-delay, are usually a form of settlement between the two manufacturers in patent litigation. The Supreme Court’s decision may be worth billions to pharmaceutical companies and consumers.

In January 2013, the American Medical Association (AMA) teamed up with the American Association of Retired Persons (AARP) and other organizations seeking to eliminate pay-for-delay agreements. The groups filed a friend-of-the-court brief in the Supreme Court case.

Click here to read the friend-of-the-court brief.

History of Pay-For-Delay Agreements.

Pay-for-delay agreements came as the result of the Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act. The Hatch-Waxman Act gives generic drug manufacturers an incentive to challenge brand name drug patents because the first generic drug manufacturer to received U.S. Food and Drug Administration (FDA) approval to launch a generic copy of a brand name drug can receive a 180-day marketing exclusivity period for the product. The FDA cannot approve any other generic applications for the same drug until the first-to-file generic manufacturer has sold its product for 180 days or has given up its exclusivity period. Click here to read the Hatch-Waxman Act.

Brand name manufacturers often challenge generic drug manufacturers who try to sell their product prior to patent expiration. This results in litigation to determine whether the generic manufacturer is violating the brand name manufacturer’s patents.

Instead of going to court over this, brand name manufacturers often choose to pay a settlement to the generic drug manufacturers for agreeing to delay the launch of its competing product.

The Impact of Pay-For-Delay Agreements.

It’s been found that pay-for-delay agreements can delay a generic drug almost 17 months before it can be put on the market. In the meantime, patients must pay higher prices for the brand name version. This also impacts Medicare and Medicaid programs.

According to an article on National Public Radio (NPR), the number of pay-for-delay agreements is increasing. Click here to read the entire NPR article.

Legalized Extortion Causes Patients to Pay High Drug Prices.

This type of legalized extortion does nothing more than drive up drug prices for all patients by keeping generic drugs off the market. On the other hand, it vastly increases the profits made by big name pharmacy companies who are able to derive even more money from expired patents.

AMA Fights to Get Rid of Pay-for-Delay Agreements.

According to a press release, AMA, AARP, the National Legislative Association for Prescription Drug Prices and the U.S. Public Interest Research Groups all signed onto the friend-of-the-court brief filed in the Supreme Court.

The AMA is concerned that pay-for-delay agreements extend patent monopolies, increase health care costs and restrict doctors’ ability to treat patients. To read the entire press release from the AMA, click here.

Contact Health Law Attorneys Experienced in Representing Pharmacies and Pharmacists.

The Health Law Firm represents pharmacists and pharmacies in investigations, regulatory matters, licensing issues, litigation, inspections and audits. The firm’s attorneys include those who are board certified by The Florida Bar in Health Law as well as licensed health professionals who are also attorneys.

To contact The Health Law Firm please call (407) 331-6620 or (850) 439-1001 and visit our website at www.TheHealthLawFirm.com.


As a health care professional, how do you feel about pay-for-delay agreements? Please leave any thoughtful comments below.


Mills, Robert. “AMA Joins Other Groups Seeking to Overturn Pay-for-Delay Drug Agreement.” American Medical Association. (January 30, 2013). From: http://www.ama-assn.org/ama/pub/news/news/2013-01-30-amicus-brief-ftc-vs-watson-pharmaceuticals.page

Federal Trade Commission v. Watson Pharmaceuticals, Inc. Case Number 12-416. Brief for AARP, American Medical Association, National Legislative Association for Prescription Drug Prices and U.S. Public Interest Research Groups as Amici Curiae in Support of Petitioner. January 29, 2013. From: http://www.thehealthlawfirm.com/uploads/2013-01-29-amicus-brief-ftc-vs-watson-pharmaceuticals.pdf

Purvis, Leigh. “Pay-for-Delay Agreements and Prescription Drug Costs.” AARP. (May 13, 2013.) From: http://blog.aarp.org/2013/05/13/pay-for-delay-agreements-and-prescription-drug-costs/

Totenberg, Nina. “Supreme Court Hears ‘Pay to Delay’ Pharmaceutical Case.” National Public Radio. (March 25, 2013). From: http://www.npr.org/2013/03/25/175043758/supreme-court-hears-pay-to-delay-pharmaceutical-case

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

“The Health Law Firm” is a registered fictitious business name of George F. Indest III, P.A. – The Health Law Firm, a Florida professional service corporation, since 1999.

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