States Ask Court To Block Efforts Against Generic Drugs

Thirty-two states have signed on to a friend-of-the-court brief in a U.S. Supreme Court case that seeks to end the "pay-for-delay" agreements in which a drug company pays competitors not to market generic versions of its brand-name drug.

The brief urges the U.S. Supreme Court to review these agreements that cost consumers billions of dollars and violate state and federal antitrust laws.

"Keeping generic drugs off the market forces Californians to pay artificially high prices and denies many access to the medication they need," said California's new Attorney General, Karmala Harris. "Our office is committed to putting an end to anticompetitive schemes like this that drive up drug prices in order to protect pharmaceutical companies' profits."

In the matter before the Supreme Court, Bayer Corporation allegedly paid its competitors $400 million in exchange for agreements not to market generic versions of the popular antibiotic, Cipro, which is used to prevent and treat a variety of bacterial infections.

$400 million settlement

In 1997, several generic companies sought FDA approval to market generic versions of Cipro. To avoid losing $1 billion in annual sales of Cipro, Bayer sued the rival companies for patent infringement - and then paid them $400 million under the cover of settling the patent litigation. As part of the settlement, the companies agreed not to market a generic version of Cipro for six years.

In 2000, class action lawsuits were filed in New York on behalf of consumers against Bayer, as well as the companies with which Bayer entered pay-for-delay agreements, including Barr Laboratories, Watson Pharmaceuticals, Hoechst Marion Roussel and the Rugby Group. The rulings in those suits allowed drug companies to pay one another not to compete if done in the context of settling patent litigation - even if the patents involved were not necessarily valid or infringed upon.

The brief supports a private antitrust lawsuit filed by direct purchasers of Cipro, which include large drug wholesalers, pharmacies, unions and health care plans.

In the brief, the California Attorney General's Office, along with the 31 other states, urges the U.S. Supreme Court to accept the case for review and allow proper antitrust scrutiny of these agreements.