The U.S Supreme Court has agreed to hear arguments about the legality of patent settlements between pharmaceutical companies, in which the branded-drug company pays the generic-drug company to delay the sale of its version. Such deals are sometimes referred to as pay-to-delay cases.

The Federal Trade Commission and the U.S. Court of Appeals for the Third Circuit based in Philadelphia say this is bad for consumers and insurers (including taxpayers who foot the bill for Medicare) because it delays cheaper drugs from reaching the market. Other appeals courts have agreed with drug companies of both types. Basically, they argue that patent litigation is certainly time consuming and costly, so getting cheaper medicine to market might occur anyway or even take longer, and somebody will bear the costs. Also patent litigation outcomes are uncertain, so depending on the particulars of the two arguments and evidence, the generic version might not get to market sooner.

The Supreme Court arguments will be this spring.

U.S. Senator Charles Grassley (R.-Iowa), who watches the drug industry as a member of the finance committee, does not buy the industry arguments.

His office released the following statement on Monday:

"Recently the Supreme Court agreed to hear a case that will determine if brand-name drug companies can continue to pay generic prescription drug companies to keep their products off the market.

"I'm particularly interested in this case because of legislation I've introduced with Senator Herb Kohl of Wisconsin that would deter these 'pay-for-delay' settlements when brand-name drug companies settle patent disputes by agreeing to pay generic-drug manufacturers in exchange for the promise of delaying the release of the generic version of a drug into the market.

"These agreements hurt consumers who don't have access to affordable medications, and they hurt taxpayers who pay for prescription drugs for federal health care programs. That's because these deals keep the price of prescription drugs high and reduce consumer choice. The Congressional Budget Office estimates that our legislation would generate $4.785 billion in federal budget savings between 2012 and 2021, and would reduce total drug expenditures in the United States by nearly $11 billion over the same decade.

"This is nothing to sneeze at. These kinds of agreements put the companies' interests above the interests of consumers. The Supreme Court's decision to put this on its docket is a positive step forward while I continue to press for my legislation."