Judge partially revives California pay-for-delay ban
A Californian judge has partially revived the state’s pay-for-delay ban after attorney general Rob Bonta requested that a preliminary injunction against the ban be modified.
On Tuesday, February 15, District Judge Troy Nunley of the US District Court for the Eastern District of California, reinstated the ban to allow the prohibition of pay-for-delay deals negotiated, completed, or entered into within California’s borders, but not those that were signed elsewhere and merely impact drug sales in California.
In December last year, the Association for Accessible Medicines (AAM), which represents manufacturers of generics and biosimilars, succeeded in securing a preliminary injunction against the California bill which characterises pay-for-delay patent settlements as anticompetitive and unlawful.
Signed into law by California Governor Gavin Newsom in October 2019, California Assembly Bill 824 (AB 824) is the first of its kind targeting the “anticompetitive” dealing between brand name drug companies and generic manufacturers.
The Californian court’s December order held that the bill, which aims to increase the number of affordable generic drugs, likely violates the Commerce Clause, a dormant commerce protection.
In early January, the attorney general filed a motion to modify the injunction to permit in-state application and only prohibit enforcement against settlements with no connection to California.
The court denied the state’s request to allow California to continue to enforce AB 824 whenever a settlement agreement is made in connection with in-state pharmaceutical sales.
However, it did modify the injunction to allow enforcement with respect to settlement agreements negotiated, completed, or entered into within California’s borders. While the attorney general alleged that AAM had never argued this application would run afoul of the dormant Commerce Clause, AAM argued that it had moved to enjoin AB 824 on multiple grounds and opposed limiting the injunction on that basis.
Nunley said: “The court agrees that plaintiff does not contest whether the State can enforce AB 824 with respect to settlement agreements negotiated, completed, or entered into within California’s borders. Further, such agreements are compliant with the dormant Commerce Clause because they regulate conduct occurring wholly within California’s borders.”
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