AAI and Fellow Consumer Groups Defend California’s Pay-for-Delay Law, Again (AAM v. Becerra)

AAI, joined by Consumer Reports and Public Citizen, has filed an amicus brief in the Eastern District of California opposing a generic pharmaceutical association’s efforts to thwart pro-consumer pay-for-delay legislation.

California Assembly Bill 824 (AB 824), which was enacted earlier this year, created a framework for California courts to treat pay-for-delay agreements as presumptively unlawful under the Cartwright Act.  AAI has long advocated for a similar approach under both state and federal law in numerous amicus filings in courts throughout the United States.

In November 2019, the Association for Accessible Medicines (AAM), a trade association that represents the interests of generic pharmaceutical manufacturers, filed a motion for a preliminary injunction against California Attorney General Xavier Becerra, seeking to bar the state from implementing or enforcing AB 824.  Among other things, AAM argued that AB 824 prevents procompetitive patent litigation settlements, leading to fewer generic challenges to branded pharmaceuticals, higher drug prices, and diminished public health.  AAI filed an amicus brief in district court countering AAM’s arguments.

After the district court denied AAM’s motion for a preliminary injunction without prejudice, the Ninth Circuit, on interlocutory appeal, vacated and remanded with instructions to dismiss the complaint for lack of standing, also without prejudice.  On August 25, 2020—the same day the district court entered the judgment and dismissal order—AAM filed a new complaint.  And on Sept. 14, AAM again asked for a preliminary injunction, arguing that it has cured the defects identified by the district court and the Ninth Circuit in its previous case.

Like AAI’s amicus brief with Consumer Reports and Public Citizen filed in the Ninth Circuit, AAI’s newest brief counters by explaining the severity of the harm caused by payments to exclude generic competition, and why AB 824 is an appropriate and beneficial outgrowth of the logic underlying the Supreme Court’s watershed decision in FTC v. Actavis and the California Supreme Court’s decision in In re Cipro Cases I & II.  Among other things, the brief explains that the public interest does not support an unfettered right for litigants to reach anticompetitive settlements, that settlements allowing for earlier generic entry are nonetheless anticompetitive when they are accompanied by a reverse payment, that exclusive licenses can violate antitrust law notwithstanding that they are permitted under patent law, and why arguments similar to AAM’s arguments were appropriately rejected by the Supreme Court in Actavis.

The brief was written by Hilliard & Shadowen Partner Rick Brunell, with assistance from AAI Vice President of Legal Advocacy Randy Stutz.  AAI thanks the law firm of Lieff Cabraser Heimann & Bernstein, LLP, and specifically attorneys Eric Fastiff and Adam Gitlin, who served as AAI’s local counsel and handled all aspects of the filing.