AGs Push to Stop Drug Industry Pay to Delay Practice

January 18, 2011 Updated: January 18, 2011

[xtypo_dropcap]A[/xtypo_dropcap]ttorneys general from across the country are urging the U.S. Supreme Court to stop pharmaceutical industry reverse payment agreements, a practice that they say prevent consumers from obtaining low-cost generic versions of brand-name drugs.

Recently-elected California Attorney General Kamala D. Harris is leading the charge with an amicus brief, and is joined by 31 additional states’ attorneys general, the AARP, Consumer Federation of America, and other groups that hope to convince the court to review if drug industry “pay-to-delay” agreements have violated state and federal antitrust laws. The delays potentially cost consumers billions of dollars.

"Keeping generic drugs off the market forces Californians to pay artificially high prices and denies many access to the medication they need," Harris said in a statement. "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 a case before the Supreme Court, the Bayer Corporation allegedly paid competitors nearly $400 million in 1997, under the guise of settling patent litigation, if they would agree not to market generic versions of the popular antibiotic, Cipro (Ciprofloxacin)—which at the time pulled in an annual $1 billion in sales for Bayer.

Class action lawsuits were filed in New York three years later on behalf of consumers against Bayer and companies that cooperated in the scheme such as Barr Laboratories, Watson Pharmaceuticals, Hoechst Marion Roussel, and the Rugby Group. However, the court ruled in favor of reverse payment agreements as long as they were done in the context of a settling patent litigation, even if the drug patents were no longer valid.

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

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