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As Americans clamor for the anti-anthrax prescription drug Cipro, several dozen antitrust lawsuits in federal and state courts accuse its manufacturer, Bayer A.G., of entering into an illegal 1997 agreement that kept a proposed generic form of the drug out of the U.S. market. Cipro is the brand name for Bayer’s patented form of ciprofloxacin hydro-chloride, the antibiotic considered best for treatment of anthrax. Bayer acquired the patent in 1987 and Cipro has since become the best-selling antibiotic in the United States, with domestic sales of about $1 billion per year. In 1991, the generic drug maker Barr Laboratories Inc. filed an abbreviated new drug application to produce a generic version of Cipro. Bayer responded by filing a patent infringement action against Barr. Barr filed a counterclaim seeking a declaration that Bayer’s patent was invalid and unenforceable. In January 1995, the Food and Drug Administration granted tentative approval to Barr to manufacture and market a generic ciprofloxacin. But Barr never made a generic form of the drug and the patent dispute never came to trial, said plaintiffs’ attorney Michael G. Nast of Lancaster, Pa.’s Roda & Nast. SETTLEMENT STRUCK In early 1997, Bayer A.G. and its U.S. subsidiary, Bayer Corp., entered into a settlement with Barr wherein Barr would drop its claims contesting Bayer’s patent on Cipro and Bayer would pay Barr and another prospective generic producer $24.55 million each not to make or market the drug. Since the January 1997 settlement, the plaintiffs contend Bayer has paid an additional $25 million per year to Barr and Rugby Group Inc., a subsidiary of Hoechst Marion Roussel Inc., to stay out of the ciprofloxacin market. Starting in mid-2000, direct and indirect buyers of Cipro began filing antitrust lawsuits against Bayer, Barr and Rugby, charging that the 1997 agreement violated federal and state antitrust laws. “Generic competition was unlawfully suppressed,” contends plaintiffs’ counsel Bernard Persky of New York’s Goodkind Labaton Rudoff & Sucharow. By entering into this “unlawful agreement,” he said, Bayer and Barr unlawfully restrained trade in the market for ciprofloxacin and effectively eliminated the possibility of generic competition. This lack of competition has driven up the price of Cipro, added plaintiffs’ attorney Joseph S. Tusa of New York’s Zwerling, Schachter & Zwerling. In general, a brand-name drug costs 50 percent more than a generic drug, Tusa said. The agreement also limited the amount of the drug produced in the United States, which has had an impact on the current shortage of Cipro, Nast said. “But for these illegal agreements we wouldn’t be in these dire straits.” Bayer contends there are no antitrust violations, said Fred Bartlit of Chicago’s Bartlit Beck Herman Palenchar & Scott, who represents Bayer in antitrust and patent litigation concerning Cipro. “If a patent is valid, you can license it any way you want. You have a legal right to exclude competition.” The Bayer patent on Cipro has been affirmed as valid several times, he reported. The company resubmitted the patent to the U.S. Patent Office in February 1999; the patent office upheld the patent’s validity. In addition, in a federal patent infringement action earlier this year, Bayer received a summary judgment dismissing invalidity claims. Bayer AG v. Schein Pharmaceutical Inc., No. 99-2181 (D.N.J.). This trumps any antitrust claims, Bartlit said. Bayer, he added, has responded to government demands for production by agreeing to produce as much Cipro as requested. There are now about three dozen lawsuits against Bayer, Barr and Rugby, charging violations of state and/or federal antitrust laws. The cases were filed in several states and consolidated in Brooklyn, N.Y., federal court. In re Ciprofloxacin Hydrochloride Antitrust Litigation, No. MDL 001383 (E.D.N.Y.). Several state court actions were filed but were removed by the defendants to federal court on the ground that the patent issue made the dispute a federal matter. Certain plaintiffs sought to remand their actions to state court, disputing the defendants’ claims that the actions could proceed only in federal court and contending that the validity of the patent was not involved. On Oct. 1, U.S. District Judge David G. Trager remanded several of the lawsuits to state courts in California, Florida, Wisconsin, Kansas, Tennessee and New York. Other claims remain in federal court. The indirect and direct customers are seeking class certification. No early resolution is expected. The Bayer patent for Cipro expires in December 2003.

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