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Case Center

Cipro

  • Issue: Price-fixing & exclusionary drug-pricing agreements

Introduction: Massive Payment Not to Compete with Cipro Charged

Lieff Cabraser represents a certified class of consumers in a California state court antitrust lawsuit against Bayer Corporation, a unit of Bayer A.G., the manufacturer of the blockbuster antibiotic prescription drug Ciprofloxacin. Sold in the U.S. as Cipro, the drug has generated billions of dollars in revenue for Bayer since 1987. The complaint also names Barr Laboratories and two other generic drug companies as defendants.

The suit charges the companies with having colluded to block consumer access to affordable, generic versions of Cipro through a massive payment not to compete. The case is on review before the California Supreme Court which will decide whether such "pay for delay" agreements among drug makers violate state antitrust law.

Factual Allegations: Bayer Paid Its Competitors Not to Enter the Market

The lawsuit arises from Bayer's agreement to pay $398.1 million between 1997 and 2003 to Barr Laboratories and two other generic drug companies in exchange for their agreement not to produce a generic version of Cipro. Bayer made the payment to settle patent litigation in which Barr claimed that Bayer's Cipro patent was void and unenforceable. After Barr prevailed on summary judgment, Bayer made the payment rather than risk patent invalidation at trial.

With the $398.1 million payment, Bayer shared some of its monopoly profits in exchange for the generic companies' agreement to stay out of the Cipro market. The resulting absence of competition enabled Bayer to raise the price of Cipro at rates that were among the highest in the pharmaceutical industry.

Consumers in California and across the U.S. had no choice but to pay inflated monopoly prices for this critical drug throughout the seven-year class period. Their injuries resulted from an agreement that is per se illegal under California law, the complaint alleges.

Case History

On November 26, 2002, the Superior Court denied the defendants' motion to dismiss the case. The Court found the complaint contained sufficient facts to state a claim for violations of California's Cartwright Act (its antitrust law) and Unfair Competition Law. On August 21, 2009, the Superior Court granted summary judgment to the defendants.

The California plaintiffs appealed the summary judgment decision in a brief filed July 2, 2010. Seventy-eight intellectual property law, antitrust law, economics, and business professors filed an amici curiae brief in support of plaintiffs/appellants. The trial court erred, explained the Academic Amici, noting:

The precedent that the trial court believed compelled the outcome in this case contains fundamental errors of economic reasoning and would shield many anti-competitive agreements from the reach of antitrust law, causing great harm to competition, to consumers, and (by unjustifiably raising the costs of needed medicines) to public health.... The interests of consumers are given no weight at all in the trial court's calculus.

On October 31, 2011, the appellate court affirmed the trial court's grant of summary judgment for Bayer. On December 12, 2011, the plaintiffs filed a petition for review with the California Supreme Court seeking reversal of the appellate court's decision. On February 15, 2012, the California Supreme Court granted the petition for review.

On March 16, 2012, the plaintiffs filed their brief on the merits before the California Supreme Court.

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