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State Court To Examine ‘Pay-For-Delay’ Deals By Drugmakers

Publication Date: 
March 02, 2012
California Watch
Bernice Yeung

Professor Mark A. Lemley was quoted by California Watch's Bernice Yeung on the legality of settlements that pay competitors to stay out of the market.

California is the first state to examine whether pharmaceutical companies can pay competitors to not make or sell cheaper generic versions of their prescription drugs.

The California Supreme Court last month agreed to review a 10-year-old class-action lawsuit involving the antibiotic Cipro (ciprofloxacin), which originally was manufactured by drugmaker Bayer. The suit argues that it was illegal for Bayer to pay a competitor to stay out of the market as part of a settlement in a legal dispute over the Cipro patent.


Given this general split between state and federal courts on antitrust law, the Cipro case is “potentially very significant,” Mark A. Lemley, a law professor at Stanford University, wrote in an e-mail.

“If reverse payments are declared illegal in California, it may affect the behavior of pharmaceutical companies nationwide, because they will face liability in California if they continue to enter into such agreements,” wrote Lemley, who wrote an amicus brief on behalf of 78 law professors arguing that the settlements are illegal.