Pay for Delay
Kohn, Swift & Graf’s antitrust lawyers represent consumers and businesses injured by illegal pay for delay agreements. Most pay for delay contracts are between makers of brand name drugs and manufacturers of generic forms of those drugs. In exchange for compensation by the brand name manufacturer (the patent holder), the generic drug maker agrees to delay release of the generic drug for sale.
A pay-for-delay agreement may also:
• form part of the settlement terms of a patent dispute claim, or
• include a promise by the generic drug maker to refrain from challenging the validity of the brand name manufacturer’s patent during the term of the agreement
Pay-for-delay agreements are intended to maintain market shares for brand name drugs by delaying competition from generic makers that sell “bio-equivalent” drugs at lower prices. Because of the delay in generic competition, consumers who use these medications are forced to continue purchasing the more expensive brand name drugs.
Pay-for-delay agreements can violate antitrust laws. The illegality of a pay-for-delay contract depends in part upon the patent held by the brand name manufacturer.
A patent gives a manufacturer the exclusive right to make or sell the patented product. This right forecloses others from competing for the product’s market, but is generally allowed as an exception to antitrust prohibitions. Pay-for-delay contracts may be considered legal exercises of this exclusivity right.
A patent holder’s exclusivity rights are not unlimited. If the anti-competitive effects of a pay-for-delay contract fall outside the exclusivity rights granted by the patent, the contract may constitute an antitrust violation.
The Sherman Act allows those injured by illegal pay-for-delay contracts to recover reasonable attorneys’ fees and treble damages. Treble damages are equal to three times the actual losses sustained by a claimant. In some cases, claimants may also obtain injunctions preventing patent holders from additional antitrust violations associated with pay-for-delay contracts.
Contact an Antitrust Lawyer
Pay-for-delay contracts between generic and brand name drug manufacturers result in tremendous economic losses to consumers and third-party payers, such as union health and welfare plans. If you have experienced increased medication costs due to a pay-for-delay agreement, contact us today to schedule an evaluation of your case without charge.