Supreme Court Ruling Creates Uncertainly for Drug Makers (ACT) (MYL) (MRK)
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Rating Summary:
15 Buy, 5 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 9
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The U.S. Supreme Court ruled that regulators can challenge so-called pay-to-delay deals between branded drug companies and generic drug makers. In a 5-3 vote, the court said the Federal Trade Commission can challenge deals.
In his opinion for the majority, Justice Stephen Breyer wrote, "Settlement on the terms said by the FTC to be at issue here - payment in return for staying out of the market - simply keeps prices at patentee-set levels, potentially reducing the full patent-related $500 million monopoly return while dividing that return between the challenged patentee and the patent challenger," Breyer wrote. "The patentee and the challenger gain; and the consumer loses."
Commenting, BMO analyst David Maris said the ruling in favor of the FTC was a "significant negative for the generic drug industry." In his view, it halt deals, puts into question existing deals, and open up reverse payment deals to FTC scrutiny and anti-trust suites.
In a positive development for drug companies, the court rejected the FTC's proposal for a quick look approach.
Stocks effected by the U.S. Supreme Court ruling include generic drug companies Teva Pharmaceutical Industries Limited (NYSE: TEVA), Mylan, Inc. (Nasdaq: MYL), and Actavis, Inc. (NYSE: ACT). Shares of Pfizer Inc. (NYSE: PFE), Merck & Co. Inc. (NYSE: MRK), Bristol-Myers Squibb Company (NYSE: BMY), and other drug makers are also on watch.
In his opinion for the majority, Justice Stephen Breyer wrote, "Settlement on the terms said by the FTC to be at issue here - payment in return for staying out of the market - simply keeps prices at patentee-set levels, potentially reducing the full patent-related $500 million monopoly return while dividing that return between the challenged patentee and the patent challenger," Breyer wrote. "The patentee and the challenger gain; and the consumer loses."
Commenting, BMO analyst David Maris said the ruling in favor of the FTC was a "significant negative for the generic drug industry." In his view, it halt deals, puts into question existing deals, and open up reverse payment deals to FTC scrutiny and anti-trust suites.
In a positive development for drug companies, the court rejected the FTC's proposal for a quick look approach.
Stocks effected by the U.S. Supreme Court ruling include generic drug companies Teva Pharmaceutical Industries Limited (NYSE: TEVA), Mylan, Inc. (Nasdaq: MYL), and Actavis, Inc. (NYSE: ACT). Shares of Pfizer Inc. (NYSE: PFE), Merck & Co. Inc. (NYSE: MRK), Bristol-Myers Squibb Company (NYSE: BMY), and other drug makers are also on watch.
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