• Consumers Ask California Supreme Court to End "Pay-for-Delay" Agreements that Inflate Prices for Prescription Drugs by Billions Annually
  • December 19, 2011
  • Law Firm: Lieff, Cabraser, Heimann & Bernstein, LLP - San Francisco Office
  • Challenging a payoff by Bayer Corporation of nearly $400 million to generic drug manufacturers for the explicit purpose of preventing the introduction to the market of generic versions of Bayer’s antibiotic Cipro, attorneys for consumers have filed a petition for review seeking the California Supreme Court to reverse an appellate court ruling that set aside antitrust claims against Bayer. The plaintiffs are a certified class of California consumers, union health and welfare funds, and others who overpaid for Cipro.

    From 1997 to 2004, Bayer signed exclusionary reverse payment agreements with Barr Laboratories under which Barr agreed not to sell a generic version of Cipro. The agreement allowed Bayer to foreclose competition by sharing its monopoly profits from Cipro with potential competitors. Bayer paid $398.1 million to Barr and other potential competitors who make generic drugs, preserving Cipro as the only choice for consumers and thereby maintaining, even increasing, its cost. Bayer’s agreement with generic drug manufacturers to keep generic Cipro off the market was the largest "pay-for-delay deal" of all time. Bayer and others contend that California's antitrust law does not prohibit such agreements.

    The issue of whether such agreements should be subject to scrutiny under the antitrust laws is prohibited. The United States Department of Justice, the Federal Trade Commission, the Attorney General of California, numerous other Attorneys General and academics and commentators throughout the Country agree that that these types of deals are anticompetitive and should not be permitted. Most recently, the U.S. Court of Appeals for the Third Circuit is considering this issue in antitrust litigation involving the prescription drug K-Dur. The issue appears to be one of first impression in California.

    "With prescription drug prices continuing their unchecked rise, drug companies owning prescription drug patents must not be permitted to suppress competition by buying off their would-be rivals," stated attorney Joseph R. Saveri, counsel for the consumers and Chair of Lieff Cabraser’s antitrust practice group. "The question of whether courts should prohibit exclusionary reverse payment agreement is important. The California Supreme Court should add its voice, establish California law in this area, and reaffirm that collusive agreements to eliminate competition violate California antitrust laws."