Lobbying Group Appeals Decision Allowing California Pay-for-Delay Law to Take Effect

The Association for Accessible Medicines (AAM), which represents generic drugmakers, is appealing a December 31 decision by a federal judge that allows California’s new law barring pay-for-delay arrangements between brand-name and generic pharma firms to go forward.

Last week, AAM filed a notice of appeal with the U.S. Court of Appeals for the Ninth Circuit.

The law, AB 824, made California the first state to bar pay-for-delay pharmaceutical agreements by making them presumptively anticompetitive if the nonreference drug maker receives anything of value from the other company. The bill would make violating these provisions punishable by civil penalty of up to $20 million per violation.

Increased competition from generics and biosimilars breaks up drug monopolies and lowers pharmaceutical costs, the state has said. California patients and state programs saved $26 billion in 2018 alone by using generic prescription drugs.

AAM had argued that the law violated the federal government’s right to regulate interstate commerce and the scope of US patents. The judge hearing the case for the Eastern District of California refused to enter a preliminary injunction against the law going into effect, saying AAM had not met its burden of proof for a preliminary injunction.

In 2013, the Supreme Court ruled in FTC v Actavis that a brand-name drug maker’s payment to a generic competitor to settle patent litigation can violate antitrust laws if the plaintiffs demonstrate that the defendants are engaged in anticompetitive behavior on a case-by-case basis by imposing an unreasonable restraint of trade based on economic factors.