The California Supreme Court will hear oral arguments next month in a proposed class action brought by purchasers of antibiotic Cipro alleging Bayer Corp. illegally paid several generics makers nearly $400 million to delay market entry, and experts say a ruling that subjects pay-for-delay settlements to a stricter standard of review could reverberate nationwide, deterring drug companies from entering into these pacts.

Attorneys are going to be watching this case to see whether the California Supreme Court goes beyond federal law and comes up with more aggressive standards under California antitrust law that pay-for-delay agreements are presumptively illegal or per se illegal, according to Michael Carrier, a professor at Rutgers University School of Law who wrote an amicus brief on behalf of dozens of professors in favor of the plaintiffs.

A ruling that departs from the U.S. Supreme Court standard and is more favorable to plaintiffs would create more uncertainty for companies over what rule applies to reverse payment transactions and breed litigation, according to Stephen Kastenberg, a partner at Ballard Spahr LLP.

“To the extent the California Supreme Court goes off in a different direction, it’s going to create confusion over the different standards and that tends to increase litigation,” he said. “We could see copycat suits in federal courts seeking to take advantage of a more pro-plaintiff standard."

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