WASHINGTON (Reuters) - The Supreme Court let stand a ruling that drug companies can pay rivals to delay production of generic drugs without violating federal antitrust laws.

The justices refused to review a U.S. appeals court ruling that upheld the dismissal of a legal challenge to a deal between Bayer AG and Teva Pharmaceutical Industries Ltd's Barr Laboratories. Bayer paid Barr to prevent it from bringing to market a version of the antibiotic drug Cipro.

When the Supreme Court refuses to hear an appeal, as in the Cipro case, it is not a ruling on the merits of the dispute and it does not set a national precedent.

The Cipro deal, involving Bayer's 1997 settlement of patent litigation with Barr, was challenged by a number of pharmacies, which appealed to the Supreme Court. More than 30 states and various consumer groups supported the appeal.

The Federal Trade Commission has opposed such deals and has supported legislation pending in Congress to prohibit such settlements, which it says have increased in recent years.

The FTC has also taken companies to court for so-called "reverse payment" deals, where brand name companies pay generic drug firms to stay out of the market.

Richard Feinstein, head of the FTC's antitrust division, said the deals cost American consumers billions of dollars per year in higher drug costs.

"I am confident that it's only a matter of time before the Supreme Court takes up this important issue and puts a stop to these anti-competitive deals between branded drug makers and generic competitors," he said.

In the Cipro case, the Supreme Court rejected the appeal by the pharmacies without comment. Justices Sonia Sotomayor and Elena Kagan did not take part in considering the case.

The New York-based appeals court, in its ruling last year, cited its similar 2005 decision involving the drug Tamoxifen, used to treat breast cancer, infertility and other conditions. The Supreme Court declined to review that case.

The Supreme Court case is Louisiana Wholesale Drug Co v. Bayer AG, No. 10-762.

(Reporting by James Vicini and Diane Bartz; Editing by Gerald E. McCormick, John Wallace, Gary Hill)