Androgel Lawsuit in Supreme Court

Androgel Lawsuit in Supreme Court

In March 2013 the U.S. Supreme Court heard a case that concerns Americans and Big Pharma. Like brand-name drug “preemption,” which insulates drug makers from liability lawsuits, as well as the duplicitously named  “Citizen’s United” decision and many others in recent history, this case pits the rights and the pocketbooks of American citizens against those of international drug makers.

This Androgel Lawsuit was brought because brand-name drug makers want to pay generic drug companies for delaying the time when the generics copy a brand-name drug and put it on the market. Delaying a generic drug’s entry into the market can add billions in profits for pharmaceutical companies, at the expense of people – and/or their insurance companies – who must continue to pay full price for that brand-name drug.

These types of payments have been made before as a form of settlement in patent litigation, though their legality has always been questioned by any consumer groups who happen to be paying attention. Big Pharma began making such payments about ten years ago.

Pay to Delay

People, health care entities and retailers call “foul” on these payments, referring to them as “pay to delay”  schemes. Drug companies abhor that nomenclature, of course. They prefer the euphemism, “reverse settlements.”

The ironic aspect of these cases is that the corporations which sue one another – the patent-holding brand-name drug makers and the generic drugmakers (accused in these cases as patent violators) – both support the payment scheme.

Both the brand name and generic drug makers see the settlements as a way of settling a legal dispute; each side gets something it wants. (Consumers get the hindmost.)

The Federal Trade Commission (FTC), by contrast, considers the payments collusion, a means to halt marketplace competition, a clear violation of U.S. antitrust laws.

Androgel at the Center in Test Case

The FTC chose to challenge the payment scheme in the case of the testosterone supplement AndroGel, which is the case the FTC brought before the Supreme Court in March. The case involves an AndroGel patent, a new version of an old drug. The brand-name drug manufacturer, Solvay, had acquired a new patent with a slightly different formula; a new patent, the company argues, grants the patent holder a whole new period of patent protection before a generic version can be launched on the market.

But generic competitors challenged Solvay’s patent. They argued that the patent on the synthesized testosterone used in AndroGel had expired decades ago. They argued that the changes Solvay made in the “new” formula did not sufficiently justify a new patent and hence a whole new round of patent protection from generic drug encroachment.

Both sides gathered evidence for two years as the litigation progressed. As the lawsuit moved into its third year, one generic company won FDA approval for its competitive product. It prepared to market it at a price six times less than the cost of brand-named AndroGel. Such a cost savings for consumers would have cut $400 million out of AndroGel’s annual sales.

At that juncture, Solvay and the generic companies reached a settlement.  The generics agreed not to market their cheaper drugs for nine years. Solvay, in exchange, agreed to pay the generics  nearly $42 million annually, a nice chunk of change for doing nothing and letting Solvay continue to enjoy its monopoly market share.

Those who defend this sort of settlement say each side gets something it wants. But what about the people who are actually paying for AndroGel, or whatever brand name drug that has paid off the generics at the expense of the people who actually use the products? It is a kind of monopoly, and price fixing, and anti-competition anathema to a free market.

The FTC appealed to the Supreme Court after a federal appeals court upheld the Solvay payments to the generics. The FTC explained to the justices that drug prices drop 85 percent once a generic hits the market and competes with the brand-name version.

U.S. Solicitor General Donald Verrilli, of Georgetown Law School said, the payments are not settlements but “old-fashioned, naked” agreements not to compete.

The FTC says generics win 73 percent of the time when they challenge patents such as this in the AndroGel case they took before the high court; but generics usually choose to settle because they can make more money by settling with the brand-name drug maker than by taking them to trial.

Lawyers for the brand name drug makers, in a vein similar to their responses in drug preemption litigation and in Citizen’s United, argue that Congress can act through legislation to stop these payments, if it so chooses. Considering how difficult it is to get any Congress – and the current one is easily the most combative and least productive one in history – to agree to do anything, this is barely an argument that bears mentioning. The best argument the drug companies have is probably that a patent is a license given by the federal government to have a monopoly for a certain limited period of time, though that argument, too, seems specious at best.

The Supreme Court’s decision on the AndroGel patent, pay-to-delay case is expected this Spring.

PI Law Group is investigating testosterone supplement injuries for potential Androgel Lawsuits. If you or someone you love has been injured by Androgel or some other testosterone supplement, schedule a free initial consultation online or call us at 508-499-3366.