WASHINGTON - Federal regulators pressed the Supreme Court on Monday to stop big pharmaceutical corporations from paying generic drug competitors to delay the release of their cheaper versions of brandname drugs. They argue these deals deny American consumers, usually for years, steep price discounts that can top 90 percent.

The Obama administration, backed by consumer groups and the American Medical Association, said these so-called “pay for delay” deals profit the drug companies but harm consumers by adding $3.5 billion annually to their drug bills.

But the pharmaceutical companies counter that they need to recoup billions of dollars in revenue from their patented products to cover the billions they spend developing new drugs. And both the large companies and the generic makers say the marketing of generics often is hastened by these deals.

Such pay-for-delay deals arise when generic companies file a challenge at the Food and Drug Administration to the patents that give brand-name drugs a 20-year monopoly. The generic drugmakers aim to prove the patent is flawed or otherwise invalid, so they can release a generic version well before the patent ends.

Brand-name drugmakers then usually sue the generic companies, which sets up what could be years of expensive litigation. When the two sides aren’t certain who will win, they often reach a compromise deal that allows the generic company to sell its cheaper copycat drug in a few years - but years before the drug’s patent would expire. Often, that settlement comes with a sizable payment from the brand-name company to the generic drugmaker.

Numerous brand-name and generic drugmakers and their respective trade groups say the settlements protect their interests but also benefit consumers by bringing inexpensive copycat medicines to market years earlier than they would arrive in any case generic drugmakers took to trial and lost. But federal officials counter that such deals add billions of dollars to the drug bills of American patients and taxpayers, compared with what would happen if the generic companies won the lawsuits and could begin marketing right away.

A study by RBC Capital Markets Corp. of 371 cases during 2000-09 found brandname companies won 89 at trial compared to 82 won by generic drugmakers. Another 175 ended in settlement deals, and 25 were dropped.

Generic drugs account for about 80 percent of all American prescriptions for medicines and vaccines, but a far smaller percentage of the $325 billion spent by U.S. consumers on drugs each year. Generics saved American patients, taxpayers and the health care system an estimated $193 billion in 2011 alone, according to health data firm IMS Health.

But government officials believe the number of potentially anticompetitive patent settlements is increasing. Pay-for-delay deals increased from 28 to 40 in just the last two fiscal years and the deals in fiscal 2012 covered 31 brand-name pharmaceuticals, Federal Trade Commission officials said. Those had combined annual U.S. sales of more than $8.3 billion.

The Obama administration argues the agreements are illegal if they’re based solely on keeping the generic drug off the market. Solicitor General Donald Verrilli, speaking at Georgetown Law School recently, noted that once a generic drug gets on the market and competes with a brand-name drug, “the price drops 85 percent.” That quickly decimates sales of the brand-name medicine.

“These agreements should actually be considered presumptively unlawful because of the potential effects on consumers,” Verrilli said.

In the case before the court, Brussels, Belgiumbased Solvay - now part of a new company called AbbVie Inc. - reached a deal with generic drugmaker Watson Pharmaceuticals allowing it to release a cheaper version of Solvay’s male hormone drug AndroGel in August 2015. Solvay agreed to pay Watson, now called ActavisInc., an estimated $19 million-$30 million annually, government officials said. The patent runs until August 2020. Watson agreed to also help sell the brand-name version, AndroGel.

Actavis spokesman David Belian disputed the government’s characterization of the agreement with Solvay. Belian said that in addition to licensing agreement over Solvay’s Androgel patents, Watson was being compensated for using its sales force to promote AndroGel to doctors.

AndroGel, which brought in $1.2 billion last year for AbbVie, is a gel applied to the skin daily to treat low testosterone in men. Low testosterone can affect sex drive, energy level, mood, muscle mass and bone strength.

The FTC called the deal anticompetitive and sued Actavis.

The 11th U.S. Circuit Court of Appeals in Atlanta rejected the government’s objections, and the FTC appealed to the Supreme Court.

The federal district and appellate courts both ruled against the government, AbbVie, which is based in North Chicago, Ill., said. “We areconfident that these decisions will be upheld by the Supreme Court.”

The Generic Pharmaceutical Association’s head, Ralph Neas, said the settlements are “pro-consumer, pro-competition and transparent.” He said every patent settlement to date has brought a generic drug to market before the relevant patent ended, with two-thirds of the new generic drugs released in 2010 and 2011 hitting the market early because of settlements.

“By doing what the FTC wants, you’re going to hurt consumers rather than help them,” said Paul Bisaro, chief executive officer of Actavis of Parsippany, N.J.

Because generic companies tend to challenge patents of every successful drug, the FTC’s position would impose onerous legal costs on brand-name drugmakers and limit their ability to fund expensive research to create new drugs, said the Pharmaceutical Research and Manufacturers of America, which represents brand-name drugmakers.

Information for this article was contributed by Linda A. Johnson of The Associated Press.

Business, Pages 19 on 03/26/2013