- Issue: Exclusionary agreements not to compete
Introduction: Massive Payment Not to Compete with Cipro Charged
Lieff Cabraser represents California consumers in a class action lawsuit charging that Bayer Corporation unlawfully restrained competition from generic drug manufacturers to Bayer's blockbuster antibiotic prescription drug Ciprofloxacin. Sold in the U.S. as Cipro, the drug has generated billions of dollars in revenue for Bayer since 1987. The antitrust complaint also names Barr Laboratories and other generic drug companies as defendants.
Factual Allegations: Bayer Paid Its Competitors Not to Enter the Market
The suit charges that Bayer, Barr, and other defendants colluded to block consumer access to affordable, generic versions of Cipro through a massive payment by Bayer to Barr and other generic drug makers not to compete.
In 1997, Bayer agreed to pay $398.1 million between 1997 and 2003 to Barr Laboratories and two other generic drug companies in exchange for their agreement not to produce affordable generic versions of Cipro, known as a "pay to delay deal." Bayer made the payment to settle patent litigation in which Barr claimed that Bayer's Cipro patent was void and unenforceable. After Barr prevailed on summary judgment, Bayer made the payment rather than risk the patent being held invalid at trial.
The complaint charges that with its $398.1 million payment, Bayer shared some of its monopoly profits from Cipro in exchange for the generic companies' agreement to stay out of the Cipro market. The resulting absence of competition enabled Bayer to raise the price of Cipro at rates that were among the highest in the pharmaceutical industry.
Consumers in California and across the U.S. had no choice but to pay inflated monopoly prices for this critical drug during the seven-year class period.
Court Approves Settlement With Bayer
In June 2013, plaintiffs agreed to resolve their claims against Bayer in exchange for a $74 million payment and additional consideration from Bayer. On November 18, 2013, the Superior Court granted final approval to the settlement with Bayer.
Class members have until March 30, 2014, to file a claim at www.ciprosettlement.com.
In finding the partial settlement fair, reasonable, and adequate, the Court noted that "the reaction of Class members strongly favors approval of the Settlement. While the Class contains thousands of consumers and third-party payors, no Class members have objected to the Settlement."
The case continues against the generic drug companies that accepted nearly $400 million to drop their patent challenge.
Earlier Cipro Antitrust Case History
In 2000, consumers filed class action complaints against defendants for their alleged antitrust violations. In 2002, the Superior Court denied the defendants' motion to dismiss the case. The Court found the complaint contained sufficient facts to state a claim for violations of California's Cartwright Act (its antitrust law) and Unfair Competition Law. In 2009, the Superior Court granted summary judgment to the defendants and dismissed the case.
The plaintiffs filed an appeal and submitted their arguments in 2010. Seventy-eight intellectual property law, antitrust law, economics, and business professors filed an amici curiae brief in support of plaintiffs/appellants. The trial court erred, explained the Academic Amici, noting:
The precedent that the trial court believed compelled the outcome in this case contains fundamental errors of economic reasoning and would shield many anti-competitive agreements from the reach of antitrust law, causing great harm to competition, to consumers, and (by unjustifiably raising the costs of needed medicines) to public health.... The interests of consumers are given no weight at all in the trial court's calculus.
In 2011, the appellate court affirmed the trial court's grant of summary judgment for Bayer. Plaintiffs sought review by the California Supreme Court to overturn the appellate court's decision.
On February 15, 2012, the California Supreme Court granted the petition for review. On March 16, 2012, the plaintiffs filed their brief on the merits before the California Supreme Court.