Supreme Court rules ‘pay to delay’ generic drugs can be illegal

The Supreme Court says deals between pharmaceutical corporations and their generic drug competitors, which government officials say keep cheaper forms of medicine off the market, can sometimes be illegal.

The justices voted 5-3 to allow the government to challenge what it calls “pay-for-delay” deals or “reverse settlements.” That’s when big pharmaceutical corporations pay generic drug competitors to delay releasing their cheaper versions of brand-name drugs.

The Obama administration says these deals profit drug companies, but harm consumers by adding to drug costs. The pharmaceutical companies say they need to preserve revenue from patented products to recover development costs. And both the large companies and the generic makers say the marketing of generics often is hastened by these deals.

Justice Samuel Alito did not take part in the case.