The California Supreme Court has revived a class action lawsuit that accuses German pharmaceutical company, Bayer, of violating antitrust law by using an underhanded practice known as “pay to delay,” where one drug company pays another to delay introduction of a generic version of its drug. In this case, Bayer paid Barr Laboratories Inc. $398.1 million to postpone its release of a generic version of Bayer’s antibiotic drug, Cipro. The settlement between the two drug companies came after a lawsuit in 1991, when Barr Laboratories accused Bayer of holding an invalid patent.
The lawsuit says that the “pay to delay” settlement put consumers at an unfair advantage, adding unnecessarily large amounts of money to their medical bills that could have been avoided with a cheaper, generic alternative. Such settlements allow for large name brand pharmaceutical companies to create monopolies on certain drugs, and charge higher prices for them. “Reverse payment patent settlements may enable the parties to extend the monopoly,” said Supreme Court Justice Kathryn Mickle Werdegar. “Insufficient scrutiny of such settlements has the potential to hamper innovation.” Barr Laboratories answered the charge by arguing that the agreement was legal, because it did not extend beyond the patent, and that the deal was fair given the hundreds of millions of dollars spent to create the drug.
Under the new ruling, the “pay to delay” practice, however, would only violate antitrust law if it included excessive cash payments. This means that plaintiffs must prove that the cash payment exceeds legal cost value, the value of any other products and services a company provides, and disproves any justifications the company attempts to make. This case was brought about by multiple lawsuits where consumers and healthcare providers alleged that the settlement caused them to overpay for Cipro from 1997 to 2003, the years in which Bayer’s patent was active.
Bayer has since come to a $74 million settlement with consumers, leaving Barr Laboratories, and parent company, Teva Pharmaceuticals as the only defendants in the lawsuit.
If you or a loved one have suffered financially due to underhanded business practices that violate antitrust law, the lawyers at Hodes Milman Liebeck are here to help you. Contact us today online at hmlm.com or call 866-730-1976 for a complimentary case evaluation.