CA justices rule against pharma in first appellate court 'pay-for-delay' suit
- In a 52-page opinion, Justice Kathryn Werdergar of CA wrote (in a unanimous decision) that a 1997 pay-for-delay agreement between Bayer and Barr (which was later bought out by Teva) violates antitrust laws.
- As part of the agreement, Bayer allegedly paid $398 million to Barr to delay marketing generic Cipro, an antibiotic, until patient expiration in 2003. This effectively limited competition.
- Payers sued both companies for anti-trust activities, claiming that it ended up costing consumers substantially more. This is the first appellate decision on pay-for-delay since a landmark 2013 Supreme Court ruling that brought renewed scrutiny to these arrangements.
The thinking behind prosecuting this type of ostensible anti-trust behavior is that such deals wipe out competition and end up costing consumers more—most likely, consumers could have paid less for Cipro between 1997 and 2003, during which time the drug generated roughly $6 billion in revenues.
On a larger level, the Federal Trade Commission estimates that these deals cost American consumers about $3.5 billion per year in higher healthcare costs. It has become clear that U.S. courts are going to start prosecuting these cases more aggressively. And that's going to herald a sea change in the way that pharma approaches the patent cliff.