California officials were dealt a setback by a federal judge who ruled that a controversial law banning so-called pay-to-delay deals between pharmaceutical companies is, in part, unconstitutional and so cannot be enforced against agreements that had no link to the state.
In his ruling, U.S. District Court Judge Troy Nunley determined that the state law, which was enacted in 2019, violated the Dormant Commerce Clause of the U.S. Constitution because it would extend to pay-to-delay agreements that happened outside of California and, therefore, attempted to regulate interstate commerce.
In these deals, a brand-name drugmaker settles a patent lawsuit by paying cash or transferring something else of value to an erstwhile generic rival, which agrees to delay launching a copycat medicine until a specific date in the future. This gives the brand-name drugmaker more time to sell its medicine without lower-cost competition.
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