California Inks Nation’s First Pay-for-Delay Law

October 18, 2019

California’s Governor Gavin Newsom signed into law the nation’s first legislation barring drugmakers from paying other companies to delay competing generics.

As of Jan. 1, 2020, the state will invoke the new law to go after such secret deals that halt research, production or marketing of a generic rival. In a typical pay-for-delay scheme, the branded drug company sues a generic developer for alleged patent infringement, and then settles out of court in a confidential deal that keeps the generic off pharmacy shelves.

The new law presumes that “these agreements are anti-competitive and delay the entry of the generic drug into the market place,” notes the state’s Attorney General Xavier Becerra. It would also “limit the ability of drug companies to use attorney-client and common-interest legal privileges to withhold relevant evidence.”

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