Cipro
Reverse Payment

ABOUT THE CASE

The Joseph Saveri Law Firm, LLP as Co-Lead Counsel represents a class of California consumers and insurers in a case against Bayer Corporation, Barr Laboratories, and other generic drug companies in San Diego County Superior Court for violations of California antitrust law.

The suit alleges that Bayer paid Barr and the generic drug makers $398.1 million in exchange for their promise to delay the release of a cheaper generic version of the blockbuster antibiotic drug Cipro. This type of agreement—known as a “pay-for-delay” or “reverse payment”—allows brand pharmaceutical companies to avoid generic competition and to continue to charge supracompetitive prices for drugs with questionable patent protection. Plaintiffs allege that through this agreement the brand and generic companies conspired to force consumers to pay inflated prices for Cipro over an eight-year period, from roughly 1997-2005. The suit, In re Cipro Cases I & II (JCCP Nos. 4154 & 4220), seeks damages for affected consumers.

“Bayer’s illegal agreement with Barr and other companies has limited California consumers’ access to necessary antibiotics,” says Joseph Saveri, co-lead counsel for the plaintiffs. “Many people have been forced to pay inflated prices for Cipro or to go without essential treatment. Meanwhile, these companies are reaping the economic gains of this unconscionable act.”

In 2013, while the case was pending before the California Supreme Court, the Class settled with Bayer for $74 million. In 2016, after obtaining a favorable 2015 landmark decision from the Supreme Court, the Class settled with generic defendants for $100 million. And in January 2017, just weeks before trial, the Class reached a $225 million settlement with Barr, the sole remaining defendant, bringing the total Class recovery to $399 million: a record for this type of case. 

SETTLEMENT REACHED

In November 2013, the California Superior Court for the County of San Diego approved a $74 million class action settlement between Bayer and the Class. On May 7, 2015, the California Supreme Court reversed the judgment of the Court of Appeal and remanded the case for further proceedings. In that decision, the California Supreme Court ruled in Plaintiffs’ favor and adopted a “structured” rule of reason as the standard for adjudicating reverse payment antitrust cases. Following remand to the Superior Court, Plaintiffs reached a $100 million settlement agreement with Defendants Hoechst Marion Roussel, The Rugby Group, Inc., and Watson Pharmaceuticals, which the court approved on November 4, 2016. In January 2017, on the eve of trial, Plaintiffs settled with Barr, the sole remaining defendant, for $225 million.

Total Class recover of $399 million is a record for this type of case, exceeding Plaintiffs’ most aggressive calculation of single damages by $68 million. The Court is currently considering settlement finalization and funds distribution.

The firm’s Cipro settlements and 2015 win before the California Supreme Court have advanced antitrust law. That Court victory reversed a run of adverse rulings for the antitrust bar in pay-for-delay cases. Courts had adopted the “scope of the patent” test to block such claims unless plaintiffs could show that the generic drug manufacturer agreed not to compete with the brand manufacturer’s product beyond the patent’s expiration. Plaintiffs successfully contended that Bayer illegally paid nearly $400 million to a rival drugmaker to keep its competing generic off the market, which allowed Bayer to charge higher prices. The Supreme Court held that pay-for-delay arrangements are subject to antitrust scrutiny under California law and adopted a “structured” rule of reason that curtailed available defenses. Consequentially, plaintiff firms nationwide will rely on Cipro in similar future cases to recover damages and to deter these types of illegal arrangements.