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State’s New AG Leads Charge Against|Drug Companies’ ‘Pay for Delay’ Deals

OAKLAND, Calif. (CN) - California's new Attorney General Kamala Harris jumped out of the starting blocks this year by taking the lead on an amicus brief that urges the U.S. Supreme Court to put an end to reverse-payment agreements, aka "pay-for-delay," in which pharmaceutical companies pay competitors, under the guise of a settlement agreement, not to market generic versions of a brand-name drug. Thirty-two state attorneys general say the practice violates 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," 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."

The amicus brief, signed by Harris and 31 other attorneys general, seeks certiorari review of 2nd Circuit decisions allowing the settlements. The attorneys general say the courts took a "bury-your-head-in-the-sand" approach to a patent's real exclusionary power and turn a "blind eye" to the reverse payment agreements, enabling "anticompetitive conduct in the name of the patent."

The crux of the brief stems from a patent infringement suit in which Bayer accused other pharmaceutical companies of infringing on its patented antibiotic Cipro, by manufacturing a generic version of the drug.

According to the amicus brief, the competitors accepted Bayer's offer of $398 million in exchange for 6 years delay.

Consumer class actions in New York claimed that this and other "pay for delay" agreements violated antitrust laws. But the 2nd Circuit, following an earlier decision regarding the prescription drug Tamoxifen, allowed the agreements to continue, even when patents had not been infringed upon.

Cipro, the brand name for Bayer's patented form of ciprofloxacin hydrochloride, is one of the best-selling antibiotics in the United States, with domestic sales of about $1 billion per year.

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