Court Strikes Down Schering Patent Settlement.

The Washington Post  (7/17, Elboghdady) reports that the US Court of Appeals for the 3rd Circuit in Philadelphia "shook up the pharmaceutical industry Monday when it challenged an arrangement between Schering-Plough and rival firms designed to delay the sale of a generic drug." While, "the Federal Trade Commission has pushed to restrict these kinds of deals ... courts have consistently upheld such arrangements." FTC Chairman Jon Leibowitz commented, "It's a major decision which can put an end to the worst abuses of the sweetheart deals and save American consumers and the federal government billions of dollars." The case was the result of separate arrangements in which Schering-Plough paid two generic drugmakers to delay marketing generic competition to the company's K-Dur medication in exchange for Schering dropping a patent infringement suit.

        The Wall Street Journal  (7/17, Kendall, Subscription Publication) points out that pharmaceuticals have been successful heretofore in defending such agreements in court. The court said that the companies could defend the agreement if it could show that it was not for purpose of restricting competition.

        Bloomberg News  (7/17, Pearson, Bliss) reports, "Wholesalers and pharmacies sued Schering-Plough beginning in 2001 over allegedly unlawful agreements to delay the entry into the market of generic versions of K-Dur, a treatment for low blood levels of potassium." In making its decision, "the appeals court directed the lower court to apply an analysis based on 'the economic realities of the reverse payment settlement rather than the labels applied by the settling parties.'"