(Daily Journal) A San Diego County judge gave preliminary approval Monday to a $100 million settlement with most of the remaining defendants in an antitrust action filed by consumers, health care companies, and government health plans that accused the companies of colluding to keep up the price of an antibiotic used to treat bacterial infections.
The agreement involving the Bayer AG drug Cipro leaves one defendant remaining in the case, Barr Laboratories Inc., which lost a motion for summary judgment at the same hearing where Superior Court Judge Ronald L. Styn approved the settlement.
Bayer reached its own settlement with the plaintiffs for $74 million in 2013. Cipro Cases I and II, 4154 and 4220 (S.D. Super Ct., filed Aug 5, 20002).
The summary judgment victory represents a potential shift in the balance of power in favor of plaintiffs in cases involving alleged antitrust violations that arise from patent litigation settlements.
“The settlement is a substantial recovery for the class,” said Joseph Saveri of the Joseph Saveri Law Firm Inc. “The $100 million recovery is substantially higher than the [Bayer] settlement, which gives some indication of the strength and merit of our claims.”
Saveri is co-lead counsel for the plaintiffs, along with Dan Drachler of Zwerling, Schachter & Zwerling LLP and Eric B. Fastiff of Lieff Cabraser Heimann & Bernstein LLP.
Plaintiffs alleged that the defendants were paid by Bayer to delay production of the generic version of the drug. Hoechst Marion Roussel Inc., The Rugby Group Inc., and Watson Laboratories Inc. are the settling defendants that will contribute to the $100 million settlement pool.
Another defendant accused of delaying generic production of the drug, Barr Laboratories Inc., will remain in the litigation with trial scheduled for Oct. 17.
The litigation, originally filed in 2000, has included a recent stop at the state Supreme Court. The case has at times straddled the borderline between intellectual property and antitrust litigation.
Bayer was engaged in patent litigation against Barr in the mid-90s over Cipro. The litigation was resolved by Bayer paying $398.1 million to Barr in quarterly installments, until the drug’s patent expired in 2003.
The plaintiffs content that this deal amounted to an anticompetitive agreement in the generics industry.
“Consequently, Bayer was able to extract monopoly profits for longer than possible, absent the illegal Cipro agreements,” the plaintiffs’ attorneys wrote in Monday’s settlement filing. “Indeed, Bayer’s pricing patterns for Cipro show that prices increased at much higher rates after the Cipro agreements—when the threat of market entry was minimal or nonexistent—than before the agreements,” the lawyers added.
The question of whether such an agreement can violate antitrust law in the process was previously posed to the U.S. Supreme Court, which found that such cases should not turn on an analysis of the scope of the patent in question but should instead fall under the “rule of reason.”
This entails a court envisioning a hypothetical world where the agreement did not exist.
Bayer initially won on summary judgment, arguing plaintiffs couldn’t meet the “rule of reason” standard but the state Supreme Court last year overruled the lower court and came up with its own “structured rule of reason,” laying out the specific factors that should be evaluated in examining patent agreements for antitrust violations.
Styn, in rejecting Barr’s motions for summary judgment, ruled the plaintiffs can go before a jury.
Joann F. Rezzo, of Edleson & Rezzo, and Kathryn Karcher, of Karcher Harmes PS, who represent Barr and the settling plaintiffs, did not respond to requests for comment.
(Reporting by Joshua Sebold)