Practice Area: Antitrust & Intellectual Property
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.
Procedural History of the Cipro Case
Following the initial filing of the lawsuit, Defendants filed a Motion to Dismiss, which was denied by the California Supreme Court in November 2002.
Thereafter, in August, 2009, the Superior Court Granted summary judgment to Defendants. California plaintiffs appealed, and filed a brief in July 2010 supported by 78 experts, including antitrust, intellectual property, business, and economics professors claiming the summary judgment would "shield many anti-competitive agreements from the reach of antitrust law," thus undermining the free market and competition to consumers.
In October 2011, the appellate court supported the trial court's Grant of Summary Judgment in favor of Bayer. In December, 2011, plaintiffs filed a Petition for Review with the California Supreme Court asking for a reversal of the decision.
In February, 2012, the California Supreme Court granted the Petition for Review, agreeing to hear the case on the merits. On March 16, 2012, plaintiffs filed a new brief on the merits of the case with the California Supreme Court. On August 20, 2012, plaintiffs filed their reply brief with the California Supreme Court.
On its own motion, the court stayed further briefing in this matter pending action by the United States Supreme Court in Merck & Co. v. Louisiana Wholesale Drug Co., No. 12-245, and Upsher-Smith Laboratories, Inc. v. Louisiana Wholesale Drug Co., No. 12-265, and further order of this court.
On March 25, 2013, the United States Supreme Court heard oral argument in Federal Trade Commission v. Actavis, No. 12-416. On June 17, 2013, the Supreme Court reversed. On July 1, 2013, Plaintiffs filed the Application to Stay Briefing and Consideration in order to Allow Appellants and Respondent Bayer Corporation to Seek Approval of Partial Class Action Settlement in the Superior Court. On July 11, 2013, Plaintiffs filed their Motion for Preliminary Approval of the proposed $74 million dollar partial settlement with Bayer.
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.
On August 9, 2013, the Court granted preliminary approval to the $74 million proposed settlement between the Class and Bayer. The Court set a final approval hearing for November 15, 2013.
On October 1, 2013, Plaintiffs filed a Motion for Final Approval of the proposed $74 million settlement with Bayer as well as a Motion for Attorneys' Fees, Costs, and Incentive Awards. On November 18, 2013, the Court granted Final Approval of the Bayer Settlement and awarded attorneys' fees to Plaintiffs’ Counsel.Following approval of the Bayer Settlement, the California Supreme Court entered an Order vacating the stay entered on July 10, 2013, and requesting supplemental briefing from the parties discussing the relevance of the United States Supreme Court's decision in FTC v. Actavis, Inc. (2013) 570 U.S. __ (133 S.Ct. 2223). The Court's Order also set an amicus curiae briefing schedule.
On January 24, 2014, in response to the California Supreme Court's Order noted above, Plaintiff-Appellants submitted a supplemental letter brief discussing the relevance of Actavis. The Defendant-Respondents submitted a supplemental letter brief as well. On March 18, 2014 several amicus curiae briefs were submitted to the California Supreme Court addressing the Cipro appeal, including those from the California Attorney General, the American Antitrust Institute, 49 Professors, the Consumer Attorneys of California, the Generic Pharmaceutical Association, the Chamber of Commerce of the United States, and the Washington Legal Foundation.
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.