California High Court Won’t Rehear Cipro Pay-For-Delay Ruling More

(Law360)  The California Supreme Court declined Wednesday to revisit its May ruling reviving drug buyers’ claims that Bayer Corp. illegally paid generic manufacturers $400 million to delay launching copycat versions of blockbuster antibiotic Cipro, clearing the way for buyers to challenge the so-called pay-for-delay pharmaceutical patent settlements under state antitrust law.

The state’s highest court denied the May 21 petition for rehearing without comment and sent the case back to the trial court, according to court records.

Joseph R. Saveri of Joseph Saveri Law Firm, which is representing the plaintiffs, told Law360 on Wednesday that the state high court’s decision was “carefully reasoned and authoritative.”

“We saw no sound basis for the rehearing petition,” Saveri said.  “With the rehearing petition denied and remittitur, the case is on its way to the trial court.  We look forward to setting the case for trial.”

Representatives for the drugmakers did not immediately respond to requests for comment late Wednesday.

In May, the California Supreme Court decided that the U.S. Supreme Court’s landmark decision allowing Hatch-Waxman Act payments to be challenged under federal antitrust law also supported permitting similar lawsuits under state competition laws.

The ruling overturned decisions by two lower courts nixing the long-running litigation and paved the way for Cipro purchasers to forge ahead with their claims against Watson Pharmaceuticals Inc., Barr Laboratories Inc., Hoechst Marion Roussel Inc., and the Rugby Group Inc.

Bayer itself is already off the hook in the case after inking a $74 million settlement with the plaintiffs shortly before the U.S. Supreme Court ruled in FTC v. Actavis in 2013.

California consumers and insurance groups brought their lawsuit against the pharmaceutical companies in California Superior Court in San Diego County in 2002, challenging the settlement Bayer reached with Barr in 1997 that paid the generic-drug maker $398 million.

In 2009, the trial court granted the drugmakers summary judgment based on a 2006 Second Circuit ruling laying out the since-invalidated rule that courts should presume pharmaceutical patent settlements to be legal as long as they don’t exceed the scope of the patent.  The U.S. Supreme Court overturned that rule in Actavis.

The California justices said lower courts should use the rule-of-reason test, which balances the harm an agreement would cause to competition against its benefits, to evaluate pharmaceutical patent settlements.  The ruling further instructed courts to determine whether a settlement delayed generic market entry based on the chance the patent had of being upheld if the drugmakers had litigated a challenge to its conclusion.

Watson had urged the California Supreme Court to rehear the case, saying the high court hadn’t considered its argument that Watson wasn’t involved in the Cipro deals and didn’t unreasonably restrain trade.  A lower court had sided with that argument, Watson said.

The plaintiffs are represented by Joseph R. Saveri, Joshua P. Davis, Matthew S. Weiler, and Ryan J. McEwan of Joseph Saveri Law Firm; Eric B. Fastiff, Brendan Glackin, Jordan Elias, and Dean M. Harvey of Lieff Cabraser Heimann & Bernstein LLP; Mark Lemley of Durie Tangri LLP; Dan Drachler of Zwerling Schachter & Zwerling LLP; and Ralph B. Kalfayan of Krause Kalfayan Benink & Slavens LLP.

Barr is represented by Jay P. Lefkowitz, Karen N. Walker, Edwin John U, and Gregory L. Skidmore of Kirkland & Ellis LLP.  The other generics defendants are represented by David E. Everson, Heather S. Woodson, and Victoria Smith of Stinson Leonard Street LLP.  All of the generics defendants are represented by Joann Rezzo of Edleson & Rezzo and Kathryn E. Karcher of Karcher Harmes LLP.

The case is In re: Cipro Cases I & II, case number S198616, in the California Supreme Court.

(Reporting by Y. Peter King.  Additional reporting by Melissa Lipman and Kurt Orzeck.  Editing by Kelly Duncan.)