A delay on Schering-Plough?

One of the most closely watched cases awaiting an early response from the Supreme Court — drawing attention partly because it involves a rigorous disagreement between two parts of the government, the Justice Department and the Federal Trade Commission — might get delayed. The FTC, while mounting an eleventh-hour plea to the Court to hear its appeal in FTC v. Schering-Plough Corp. (05-273), also has suggested that the Court may want to put off acting on the case for the time being.

The case seeks to have the Court clarify the interplay between antitrust law and patent law, in dealing with schemes in which makers of pioneering drugs make payoffs to delay the marketing of cheaper generic drugs. (Mike McQuinn has discussed what is at stake in the case in the post just below, dealing with cases in which the Solicitor General has supplied the government’s views to the Court.). The Court is to examine the case at its Conference next Thursday, according to the electronic docket, and thus might be expected to act on it soon after that.

Last October 31, the Court (with Justice Stephen G. Breyer recused) asked the Solicitor General to react to the FTC appeal. Finally coming in with a response on May 17, SG Paul D. Clement said the case had too many flaws to make it a good vehicle for review of the antitrust question. Clement did not doubt that the case raised “an important and unsettled issue,” and that the practice at stake poses “risks for competition and consumers,” and that the deals involved “can delay the marketing of low-cost generic drugs for many years.” The solicitor general, however, then proceeded to marshal a half-dozen reasons why the Court should bypass this case — incliuding the absence of a Circuit Court conflict, and the nature of the actual holdings in the court below, the Eleventh Circuit.

On Monday, the FTC answered, suggesting that there are “urgent practical reasons why immediate review is needed.” (The post below provides a link to this brief.) The FTC said that “the economic impact of the ruling below on consumers of prescription drugs — including the states — is staggering…Billions of dollars in added prescription drug costs annually are at stake. The decision below has opened a Pandora’s box of anticompetitive settlements between brands and generic competitors.”

But, perhaps most significantly, the FTC suggested that the problem it had perceived in brand name payoffs to would-be generic competitors is getting worse. Its brief reports: “Although there was a five-year lull in pay-offs to potential competitors after the Commission commenced enforcement actions aimed at exclusion-payment settlements, pharmaceutical companies have once again started entering into settlement agreements that include both compensation in various forms to generic challengers and restrictions on generic market entry. Harm is very likely ongoing each day that the decision below prevails.”

Even so, the FTC, perhaps fearing that the Solicitor General has done enough to persuade the Court to decliine to review the Commission appeal, dropped into its brief a foonote suggesting that the case might be put on hold. It noted that the Second Circuit Court, in a case that largely followed the Eleventh Circuit’s lead on the antitrust issue, has a petition for rehearing pending. That is the case of Taxmoxifen Citrate Antitrust Litigation (Second Circuit docket 03-7641). There could be an appeal to the Supreme Court in the offing in that case, the FTC said, so “the Court may wish to hold the present case pending final resolution of that case.” It make that suggestion after conceding in its brief that “it is always possible for an issue dividing the lower courts to become more clearly defined through further litigation.”

(NOTE: The Supreme Court already has bypassed the specific issue the FTC raises, in Andrx Pharmaceuticals v. Kroger (03-779) and similar cases, on October 12, 2004.)