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.
May 2015 Update
On May 7, 2015, the California Supreme Court resoundingly endorsed consumers’ right to challenge pharmaceutical pay-for-delay settlements under California competition law. Reversing a grant of summary judgment to Bayer and Barr, whose $398.1 million deal blocked access to affordable generic versions of the widely prescribed antibiotic Cipro for nearly seven years, the Court held that “[p]arties illegally restrain trade when they privately agree to substitute consensual monopoly in place of potential competition.”
“This opinion is a credit to the continued vitality of the Cartwright Act. The Court’s decision ensures that consumers and all purchasers will receive the benefits of a competitive marketplace, by stopping pharmaceutical companies from raking in massive profits through collusion to maintain high monopoly prices,” stated Lieff Cabraser attorney Brendan P. Glackin. “Justice Werdegar and the other Justices articulate a clear standard for the lower courts that will protect California consumers going forward. Among the profusion of reverse-payment settlements, this is one of the very worst, and we look forward to bringing this matter before a jury of California citizens.”
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.
Bayer Cipro Settlement
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.
Further information on the settlement and distribution of funds can be found at www.ciprosettlement.com.