US Supreme Court at last agreed to hear the arguments in favor of legalizing the pharmaceutical patent infringement settlement. Pharmaceutical companies that sell the branded drugs pay generic drug makers to withdraw the challenge and delayed the sale of their products in the market. The current litigation settlement between branded and generic drug manufacturers is governed by the Hatch-Waxman Amendments in 1984. Generic manufacturers must notify the branded drug manufacturing company before launching an infringing product, so that branded manufacturers can get an opportunity to take legal action against the infringement.
Most of the litigations are settled by negotiations. There are many methods of the patent settlement. It includes:
- A negotiated date is settled for launching the generic drug in the market with or without paying royalty to the branded company.
- Similarly, launching or licensing of branded drug is suspended for a specific period.
- Cross licensing agreement between the brand manufacturers and generic companies.
Generic Pharmaceutical Association (GPA) is against the outright bans of settlement issues. Their argument is that if the merit of the patent settlement case is not considered, outright rejection will hamper the future of the generic business because the generic companies have settled many tough issues by negotiations. It has saved huge money of the common people. Early settlement of the patent issue by negotiation has enabled generic companies to provide many essential drugs to the people. Therefore, GPA wants that the authority should maintain a regular surveillance on the good and bad settlements and take stern action against the bad settlement. It will ultimately help the consumers.
However, Federal Trade Commission (FTC) opposes the trade settlement practice for a long time. Since 2001, FTC has filed more than 20 cases against the patent settlement between the brand manufacturers and generic companies. Their main arguments are:-
- It is difficult to create a guideline to sort out the pro and anti-competitive elements of the settlements.
- Settlement will deprive the people from getting the drug at lower prices.
- Injunction on various issues will stall the launching of cheap drugs.
- This type of settlement does not comply with the US Antitrust law.
- The settlement practice reduces the scope of competition in the market.
While the United States Patent and Trademark Office (PTO) grant the 'patent and trademark' FTC approves the Brand-Generic patent settlements. Recently three federal circuits have given the verdict in favor of patent settlement. Still, a section of brand manufacturers and generic companies are unhappy with the conservative views of FTC. Therefore, they demand the intervention of Supreme Court in this matter. On December 7th, Supreme Court agrees to sort out the patent infringement settlement problem in an interim ruling of FTC vs Watson case.
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