Judge refuses to block pay-for-delay law pending appeal

A judge has refused to temporarily block California’s ban on pay-for-delay deals while a group of generics manufacturers appeal against the judge’s earlier decision.

On Friday, January 10, US District Judge Troy Nunley rejected the Association for Accessible Medicines’ (AAM) request for an injunction while it appealed against Nunley’s decision in late December 2019 to the US Court of Appeals for the Ninth Circuit.

In October, California became the first US state to ban pay-for-delay deals (where a branded drug manufacturer pays a generic competitor to settle patent litigation and keep lower-cost generics off the market) in the pharmaceutical industry.

Under law AB824, pay-for-delay deals are now automatically considered to be anti-competitive and open to civil litigation.

The AAM had brought a legal challenge against the law at the US Court of Appeals for the Ninth Circuit to reverse California’s ban on pay-for-delay deals, claiming it was unconstitutional.

Members of the AAM, which include generic and biosimilar pharmaceutical manufacturers Sandoz, Accord, Amneal, and Teva, claimed that the law limits out of state commerce as it is not limited to deals within the state of California.

According to the association, the pay-for-delay law violates key clauses in the US Constitution including the “dormant commerce clause”, which holds that Congress has power over interstate commerce.

The clause, said the association, prohibits state laws such as AB824, which it says governs commerce across different states.

However, in a late December ruling, Nunley rejected the AAM’s motion to bar the law from taking effect, after finding that it was premature given that it had as of yet not been applied in any specific cases.

The AAM subsequently appealed against the decision, asking the Ninth Circuit to overturn the judge’s decision, while also requesting an injunction pending appeal.

Late last week, Nunley denied the motion for an injunction, ruling that the AAM had not shown a likelihood of success.

Jeff Francer, general counsel of the AAM, said: “AAM opposed AB 824, because the new law will harm patients in California by denying them earlier access to affordable generic and biosimilar prescriptions drugs. Additionally, by attempting to regulate federal patents and transactions that occur wholly in other states, the law violates the Constitution.”

Francer added that the association was pleased that the district court recognised that “if the attorney general were to enforce the terms of AB 824 against two out of state parties that entered into a settlement agreement outside of California, having nothing to do with California, such conduct would likely violate the Dormant Commerce Clause”.

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