WASHINGTON—U.S. pharmaceutical companies can be sued for making deals that keep the cost of drugs high by delaying the creation of less expensive generic medications, the U.S. Supreme Court ruled today.

So-called "pay-for-delay" arrangements, which allow drug manufacturers to keep cheaper generics off the market for a time, are "unusual, and there is reason for concern that such settlements tend to have significant adverse effects on competition," read the decision written by Associate Justice Stephen Breyer.

The decision, while finding the payments anti-competitive, did not go so far as to find the practice illegal.

"This court declines to hold that reverse payment settlement agreements are presumptively unlawful," the court said.

But the justices said litigants could challenge the individual deals in court on a case-by-case basis.

"Courts reviewing such agreements should proceed by applying the "rule of reason," rather than under a 'quick look' approach," the Supreme Court decision said.