Antitrust & Intellectual Property

Cipro Cases I and II

Issue: Exclusionary agreements not to compete

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 through a massive $398.1 million payment by Bayer to Barr and other generic drug makers. 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.

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 previous 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.”

Upon return to the Superior Court, the parties agreed to a schedule for additional fact discovery, expert discovery, summary motions and motions in limine. In addition to pursuing the fact discovery (which required some motion practice before this Court), expert discovery began anew. The Plaintiffs disclosed seven experts, and the Generic Defendants disclosed nine. Each expert submitted an outline of their expert testimony and all sixteen were deposed.

Defendants filed an omnibus motion for summary judgment, Watson again filed a separate motion for summary judgment, and Plaintiffs opposed both. Plaintiffs filed a motion for summary adjudication of many of the Generic Defendants’ affirmative defenses, and the Defendants opposed that.

On August 12, 2016, the Plaintiffs and the HMR Defendants entered into an agreement resolving all of the claims of Plaintiffs and the Plaintiff Class against the HMR Defendants (the “HMR Settlement Agreement”). Plaintiffs agreed to release all of their claims against the HMR Defendants in exchange for $100,000,000 in cash and other valuable consideration. The HMR Settlement Agreement represented an additional partial settlement of the claims; Plaintiffs continued to prosecute their claims against Barr.

Upon agreeing to the settlement, the HMR Defendants withdrew their joinder in the omnibus summary judgment motion, Watson withdrew its separate summary judgment motion, and Plaintiffs withdrew their summary adjudication motion only against the HMR Defendants. The Court on August 15, 2016 denied Barr’s motion for summary judgment and granted Plaintiffs’ motion for summary adjudication.

On September 12, 2016, the Court denied Barr’s motion to decertify the Class, and on September 1, 2016 granted in part and denied in part Plaintiffs’ motion to exclude evidence of Barr’s alleged procompetitive justifications for the Bayer v. Barr settlement. On the same day, the Court also granted Plaintiffs’ motion to exclude evidence of subsequent challenges to, and the Patent and Trademark Office’s re-examination of, Bayer’s ‘444 Cipro patent.

Beginning on October 24, 2016, the Court heard two weeks of argument on Barr’s and Plaintiffs’ over twenty-five motions in limine. The Court heard live testimony pursuant to Rule 402 from Plaintiffs’ expert Dr. Scott Hemphill and Barr’s experts Dr. Jerry Hausman and Dr. Gregory Bell. The Court denied Barr’s motion to exclude Dr. Hemphill and granted in part Plaintiffs’ motion to exclude some of the opinions proffered by Dr. Hausman and Dr. Bell.

The Court denied Plaintiffs’ motion to exclude testimony from Barr’s former CEO, Bruce Downey, pursuant to a waiver of the attorney-client privilege, and the Court of Appeal on December 12, 2016 denied the petition for a writ of mandate. On January 6, 2017, the Court denied Barr’s request to revisit the Court’s order granting Plaintiffs’ motion to preclude Barr from presenting evidence of the ’444 patent’s subsequent generic challenges and re-examination. The case was set for trial on January 20, 2017, and the parties were prepared to pick the jury beginning on January 23, 2017.

On January 25, 2017, Plaintiffs filed a Motion for Preliminary Approval of a proposed $225 million settlement with Barr Laboratories. The Court previously approved settlements with Bayer and the HMR defendants, which total $174 million. If the Court approves the $225 million settlement with Barr, the Class’s total recovery will be $399 million. The amount exceeds the payment Bayer made to Barr and to the HMR defendants not to compete, and is approximately $68 million more than Plaintiffs’ damage estimate. It is an extraordinary result for the Class.

Further information on the settlement and distribution of funds can be found at www.ciprosettlement.com.