The Supreme Court Fight Over Generic Drugs Could Be The Obamacare Of 2013 →

The Supreme Court is going to decide this term whether it's okay for brand-name drug companies to pay generic drug makers to delay the release of their cheaper alternatives.

This so-called "pay for delay" practice costs consumers $3.5 billion each year in higher drug costs, the Federal Trade Commission claims.

"This is the health care reform case of 2013," David Balto, a former FTC policy director, told Politico. "There's no other case that can have as much impact on reducing health care costs."

On Friday, the justices agreed to hear three of these cases — including Federal Trade Commission v. Watson Pharmaceuticals. 

Here's how pay-for-delay typically works.

“There’s no other case that can have as much impact on reducing health care costs.”

Brand-name drug makers sue generic companies for patent infringement, and then agree to withdraw the suits and pay some money to generics if they agree not to sell their cheaper drugs for a while.

In the case of Watson Pharmaceuticals, the generic drug maker and another company were cleared in 2003 by the Food and Drug Administration to sell a generic version of a Solvay Pharmaceuticals product.

Following a patent lawsuit, Solvay and Watson settled for tens of millions of dollars, with Watson agreeing not to market its drug until 2015, according to Politico. The FTC argued that the agreement violated antitrust laws and was anti-competitive. 

Oral arguments are due in the Spring, and we could see a ruling next Fall, according to Politico.