Lieff Cabraser Civil Justice Blog
Drug Antitrust Litigation

American Antitrust Institute Successfully Opposes Drug Makers’ Attempts to Enjoin New California Law Outlawing Pay-for-Delay Drug Settlements

Lieff Cabraser serves as counsel for amicus AAI, who successfully secured denial of drug makers’ requested injunction against the new pro-competition law AB 824

Lieff Cabraser serves as counsel for amicus American Antitrust Institute, on whose behalf the firm filed a brief in opposition to drug makers’ attempts to enjoin a new California law (AB 824) which outlaws pay-for-delay drug settlements. The motion for preliminary injunction against Assembly Bill 824 was brought by the so-called “Association for Accessible Medicine.”

AB 824 creates a presumption that “reverse payment” settlement agreements over drug patent infringement claims between brand-name and generic pharmaceutical companies are anti-competitive and unlawful. Also known as “pay-for-delay” settlements, such agreements allow a brand-name drug manufacturer to effectively extend its monopoly past a drug’s patent expiration date by paying its generic competitors to refrain from releasing lower-cost alternate versions of a given drug.

The Association for Accessible Medicine, “a nonprofit, voluntary association representing the leading manufacturers and distributors of generic and biosimilar medicines, manufacturers and distributors of bulk active pharmaceutical ingredients, and suppliers of other goods and services to the generic and biosimilar pharmaceutical industry,” sought to invalidate the new law on various grounds, including that its new presumptions of antitrust law violation by the pay-for-delay conduct would interfere with existing ongoing lawsuits over patent infringement relating to generic medications.

On Tuesday, December 31, 2019, the U.S. District Court for the Eastern District of California denied the preliminary injunction, siding with California Attorney General Becerra and the AAI and finding that the AAM had failed to establish a likelihood of success on the merits of its claims and had similarly failed to raise serious questions as to the merits of those claims. The Court also noted that the AAM’s motion did not sufficiently plead preemption arguments under which federal law could be seen to outweigh state law, and observed that the prospective monetary fines outlined in AB 824 were neither excessive nor disproportionate.

Read a copy of Judge Nunley’s opinion.