Sandhaus v. Bayer Corp., et al.
Secured largest consumer recovery in Kansas from a pay-for-delay case
On November 23, 2015, the court granted final approval of a $4.5 million settlement on behalf of Kansas consumers and third party payors who purchased, paid for, or were reimbursed for prescriptions of ciprofloxacin hydrochloride, an antibiotic marketed by Bayer Corporation (Bayer) under the brand name Cipro®. On December 8, 2015, the court granted preliminary approval of an additional $4.5 million settlement with the generic defendants Barr Laboratories, Inc., Hoechst Marion Roussel, Inc., Rugby Group, Inc., and Watson Pharmaceuticals, Inc. This brings the total settlement to $9 million, pending final court approval.
The plaintiffs alleged that Bayer and several generic drug manufacturers entered into pay-for-delay agreements concerning Cipro as early as January 1997, which caused the plaintiffs to continue paying supracompetitive prices for Cipro throughout the class period (January 1997 - October 2004).
Cipro was a blockbuster drug for Bayer, generating several hundred million dollars in revenue annually. Generic drug manufacturers wanted to enter the market with lower-priced generic alternatives to the brand-named drug, which would provide significant cost savings to consumers. They challenged the validity and enforceability of the patent covering Cipro. The plaintiffs alleged that rather than risk a court determination that the Cipro patent was invalid or unenforceable, Bayer agreed to pay these generic manufacturers nearly $400 million to abandon their patent challenge and refrain from launching a generic version of Cipro until at least 2003. This agreement substantially delayed entry of low-cost generic alternatives into the market, thereby reducing competitive options to consumers and maintaining high Cipro prices.
The Sandhaus class action was originally filed in 2000, but the Kansas District Court administratively closed it, pending the outcome of the Supreme Court's decision in Federal Trade Commission v. Actavis, Inc. Judge Droege reopened the Sandhaus class action following the Actavis decision, in which the Supreme Court found that pay-for-delay agreements, like the ones concerning Cipro, could violate the federal antitrust laws.