The Supremes and Generics

Court_front_med You have to admire Washington.  It is the only city in the United States where, when you don’t do anything, you make news.  At least if your name is Supreme Court.

Monday the Associated Press noted that the Supremes have declined to hear a case that would affect the market and the pricing of generic drugs.

Market forces demand that once a generic enters the market, then the pricing for the chemical compound falls.  Example, generic simvastatin, brand name Zocor, enters the market, and the price goes down.  The more generics that enter the market, the further down the price goes. 

The Federal Trade Commission (FTC), however, did not like it when Schering-Plough settled lawsuits against generic manufacturers which involved, as part of the settlement, a delay in time until the generic would hit the market.   The FTC sought to overturn a lower court decision allowing the lawsuit settlements on the basis that such a practice violated antitrust laws. 

While the FTC might not like it, I’m not sure what is illegal in two companies settling a dispute between them in any way they see fit.  While the outcome may not be in the public’s best interest, the public is not a party to the lawsuit, therefore, in the strict legal sense, I’m not sure that interfering in lawsuit settlements doesn’t stretch anti-trust a bit far.  Apparently the Supremes thought so. 

Meanwhile, AP also reports that four senators are introducing legislation that would ban such settlements.  It will be interesting to see if that is Constitutional. 

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