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July 13, 2007

Cipro: Court OKs Class Action Against Bayer

A long-running lawsuit accusing Bayer Corp. of blocking generic versions of an antibiotic can continue, the state Supreme Court ruled Friday. The decision reaffirms the court's 2005 ruling that Wisconsin consumers can bring antitrust lawsuits against out-of-state practices if the conduct substantially impacts them.

The class-action suit alleges Wisconsin consumers paid higher prices for Cipro as a result of an unlawful settlement between Bayer and three generic drug manufacturers. The 1997 agreement prohibited the manufacturers - Barr Laboratories Inc. Hoechst Marion Roussel Inc., and The Rugby Group - from selling a generic version of Cipro. The drug is used to treat sinusitis, respiratory infections and more than a dozen other ailments, the Supreme Court decision noted.

A group of Wisconsin consumers filed suit in 2000 alleging that between January 1997 and December 1998 Bayer raised the price of Cipro 16.7 percent. The Supreme Court ruling notes Bayer's domestic revenues from Cipro between 1998 and 1999 rose from about $834 million to $1 billion and profits grew from about $755 million to $921 million. The suit contends consumers paid more for Cipro than they would have if the settlement had never existed and alleges violations of Wisconsin's antitrust statutes.

A Milwaukee County judge threw out the lawsuit in 2003, ruling Wisconsin's antitrust laws apply only to commerce within the state. The lawsuit deals with commerce between states, the judge said. A Wisconsin appeals court reinstated the suit last year. That court relied upon a state Supreme Court finding that Wisconsin's antitrust laws can apply to interstate commerce if the conduct "substantially affects" consumers in the state.

Bayer asked the Supreme Court to overturn the appeals court. The company contended the "substantially affects" test requires the lawsuit show specific effects on Wisconsin consumers, not general national effects. The consumers countered that requiring such specific effects would set the bar for a lawsuit too high. The Supreme Court in a 4-3 decision agreed with the consumers, saying requiring more would close off consumer lawsuits and undermine Wisconsin's antitrust statutes, which exist to encourage competition.

Their 35-page complaint lays out enough information to stand, the court said. "An allegation that a group of pharmaceutical companies conspired to maintain monopoly prices on a best-selling prescription drug purchased by thousands of Wisconsin residents over several years meets the 'substantially affects' test," Justice Louis B. Butler Jr., writing for the majority, said. Justice David Prosser said in a dissent the decision leaves the door open for all kinds of antitrust suits against illegal activities outside of Wisconsin.
David Petrou, a spokesman for Jones Day, a law firm representing the drug companies, declined comment. A message left for the consumer group's attorney wasn't immediately returned. By TODD RICHMOND

More information:
Appeals court: Drug lawsuit can proceed
Cipro: Nationwide class action
FDA bans Bayer antibiotic for poultry use