Ninth Circuit affirms California’s pay-for-delay ban

A US federal appeals court has refused to block California’s ban on pay-for-delay deals in the generic drugs industry.

Generics manufacturers, represented by the  Association for Accessible Medicines (AAM), had previously failed to have the law, known as AB 824, overturned by a California district court.

In a  judgment issued on Friday, July 24, the US Court of Appeals for the Ninth Circuit upheld that decision, finding the AAM had no standing to bring the challenge.

AB 824 banned so-called ‘pay-for-delay’ deals in which patent owners settle infringement suits against generic makers, and effectively pay to keep generic competition off the market for a period of time.

Generics makers have consistently opposed the law, which was championed by California governor Gavin Newsom.

But the AAM failed to establish its statutory authority to challenge the law in court, the Ninth Circuit found.

“AAM has not shown that there is a ‘substantial risk’ that AB 824 will cause

any of its members to suffer injury that is concrete, particularised, and imminent,” the judgment said.

“At most, AAM’s members state that they are engaged in patent infringement lawsuits involving pharmaceutical products and that they historically have settled such lawsuits, but they do not allege that they intend to enter into settlement agreements of the sort prohibited by AB 824,” it added.

The AAM also failed to establish that its members had suffered economic harm as a result of the law to date, either by foregoing pay for delay settlements or litigating patent-infringement suits to judgment.

The Ninth Circuit sent the case back to the California district court with instructions to dismiss it with prejudice, meaning the claims cannot be litigated again.

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