Opponents of 'pay-for-delay' deals have suffered a setback in the USA with the news that the Supreme Court has rejected a challenge to a settlement reached over 11 years ago between Bayer and Barr Pharmaceuticals over the German firm's antibiotic Cipro.

The Supreme Court has turned down an appeal from purchasers of Cipro (ciprofloxaxin), including large drug wholesalers and pharmacies concerning a 1997 settlement which saw Bayer pay Barr $398 million. In return, the latter firm (now part of Teva) pulled its patent challenge and agreed not to sell a generic version of Cipro until June 2003, ie six months before the key patent expired.

The Supreme Court case arose from a recent lower court decision upholding the settlement and the view that the pact was not illegal under antitrust laws. Indeed Bayer argues that these pay-for-delay deals actually benefit consumers and Barr could sell its version before Cipro lost patent protection. The Leverkusen-headquartered company noted that “Because the settlement was within the scope of Bayer’s patent, it excluded no more competition than the patent itself lawfully excluded".

The ruling comes at a time when President Obama is looking to  ban pay-for-delay deals, claiming that such a move would save the US government around $8.8 billion through 2021. The Federal Trade Commission has also repeatedly pushed for a ban, but both the branded and generics industries believe these settlements do not prevent competition, a view regularly backed by the courts.